Mr. Murphy, GATA hasits 10^th anniversary this year. What are the most importantdiscoveries of this ten year journey?

The Gold Anti-Trust Action Committee (GATA) wasorganized in January 1999 to expose the manipulation of the gold price by a GoldCartel consisting of the US Government and various bullion banks, such asGoldman Sachs and JP Morgan Chase, for more than a decade. Initially, GATAthought it was just the bullion banks. As time went by, we realized the USGovernment was behind the rigging. 

Let’s get back intothe year 1998. In September 1998 you started a website dedicated to observe thegold market called LeMetropoleCafe.com. A few days later a giant hedge fundnamed Long Term Capital Management (LTCM) crashed. Could you tell us a bit aboutthis event and how it lead to the launch of the Gold Anti-Trust ActionCommittee in January of 1999?

Prior to opening my website, www.LeMetropoleCafe.com in Septemberof 1998, I had been told from very good sources that LTCM was short 400 tonnesof gold as part of a gold carry trade. When they blew up, I expected the priceof gold (below $300 at the time) to explode. Each time it went above $300,bullion banks such as Goldman Sachs, Morgan, Deutsche Bank, and Chase Bankwould sell in unison and stop the upward movement in its tracks. Right then andthere I knew something was fishy. Everywhere I turned, I received more feedbackon the gold market which suggested it was managed. As a limit position futurestraders some time ago, I knew something about how markets trade and it made nosense the way gold was trading at the time. 

One more question withregard to LTCM. In order to handle that crisis there was an organization calledthe “Counterparty Risk Management Policy Group” (CRMPG). What was the purposeof that organization and what did it in 2002 when JPMorgan Chase was in trouble?

May I quote from an article I wrote inSeptember 2006? 

Sure.

Not only does it answer your question, as Ithink, but it reveals also the nature of the beast which caused so manyproblems years later. I have done back then a good bit of research trying toobtain some insight into the inter-relationship between the Federal Reserve,the government, and the large money center NYSE member banks. In my reading Ikept coming upon the phrase 'moral hazard'- as in "we want to avoid amoral hazard". I tried to find the definition as they defined within thecontext of what I was reading - no luck.

Then I started reading Robert Rubin's book, “In an Uncertain World'” As Secretary of the Treasury duringthe Clinton Administration, I thought I would try to get in the mind of one ofthe principals of the group we call the Plunge Protection Team (PPT). In thebook he writes about his service at the White House. The book starts off withthe Mexican Bailout and discusses that bailout and those that followed from theperspective of Mr. Rubin. After the first few pages he uses the term anddefines 'moral hazard'.

MORAL HAZARD - A problem whereas investors,after being insulated from the consequences of risk by intervention, might payinsufficient attention to similar risk the next time, or operate on theexpectation of official intervention.

We traders know this government intervention more as the ”Greenspan Put”.

'Private Counterparty Surveillance' is another phrase that I read severaltimes. This is basically the large NYSE member banks, a couple of wellconnected hedge funds, and that form the 'Counterparty Risk Management PolicyGroup'. The one financial member of this group that is not a bank or a hedgefund is General Motors Asset Management. I guess with $300 billion inoutstanding paper they want to be sure GM has a seat at the table.

What we also know is that we had a series of bailouts in the mid to late 90'sthat started out with the Mexican bailout. Robert Rubin of Goldman Sachs wassworn in as Secretary of the Treasury on the evening of January 10th, 1995.That same evening an emergency meeting was held to finalize a plan to bail out Mexico.

I guess this could not be doneuntil the well connected Rubin was in office. The administration waited untilRubin was confirmed and sworn in to move ahead. Greenspan's "irrationalexuberance" speech, Long Term Capital Management (LTCM) bailout, the"Asian Flu" economic crisis and Y2K followed. All contributed to whatwe all now know as a 'moral hazard'. In 1999 the 'Counterparty Risk ManagementPolicy Group' (CRMPG) was formed to address the issues with LTCM and to developpolicy that would protect the financial world from another threat to thefinancial markets such as the LTCM incident.

Now fast forward to 2002. In May of 2002 the SEC appears to have fears that amajor bank - one of two that clear government paper - may become insolvent dueto derivative issues. The possible problem bank is JP Morgan. By the end of theyear CRMPG recommends the foundation of a new bank be put in place just incase. The new bank would be a coordinated effort of the members of the CRMPG.The Federal Reserve and the SEC approve.
Also in 2002 it just so happens that we see a big jump in the use of programtrades. The major players are also members of the CRMPG. Those without largeproprietary trading units such as Citigroup, start them. Citigroup is quoted assaying something along the lines that due to "new" innovations theysee less risk in trading.

Remember JPM’s "problems". Suddenly they went away. A "stealthbailout" is put in place. About year later the Wall Street Journalreported concerns that JPM was making a lot of money in the "risky"business of trading their own capital. They said, "Profits have beenincreasing recently due to a small and low profile group of traders making bigbets with the firm's money. Apparently, an eight man New York team has pulled in more than $100Mof trading profit with the company suggesting it is a result of better marketconditions and not greater risk." Program trading was running at about 25%of all shares traded on the NYSE in early 2002. In 2006 program trading isrunning near 60%.

Ifyou look at the members of the CRMPG you will find some foreign banks included.We are not looking at a group that deals solely with the US markets. Any market that could be contagious to the greater good issubject to control by the CRMPG. 

In2004 Greenspan acknowledged concerns about derivative growth. All markets hadseen strong growth in the previous five years. In the OTC market, the notionaloutstanding of equity-linked derivatives was $4.5 trillion in June 2004, havingtripled in size over the previously five years (source: BIS). The listedoptions market has also shown strong growth. For example, in 2004 the combinedopen interest of equity index options contracts on was around $3 trillionnotional, double that of 1999. Turnover, at $200 billion notional per day in2004, was triple that of 1999 (source: BIS). Data for the retail structuredproduct markets is less comprehensive. Estimated issuance in Europewas around €100 billion in 2004. Around half of the issuance was in Italy, Spainand the UK (the other major European markets are France, Germanyand Switzerland). On this basis, the market has doubled in size from 2000 to 2004.

However, free markets do not work this way. Their collusion at their highestranks to secure the financial stability of the largest financial institutionscould be at odds with the investments of smaller institutions and may be atodds with the small investor’s long term investments and goals. When LTCMfailed many of us could have not cared less if you were not a shareholder ofone on the banks that bailed them out. The bailout was simply put in place tosave their own skins and the investors they serve.

In short, “Moral hazard” has led tomoral decay at the highest ranks of our financial institutions. 

Another organization whichis not in the public spotlight is the “Exchange Stabilization Fund” (ESF), thatwas authorized by Congress. What is the aim of this specific group?

Well, here it isin their own words: 

The Exchange Stabilization Fund (ESF) consistsof three types of assets: U.S. dollars, foreign currencies, and Special DrawingRights (SDRs). The ESF can be used to purchase or sell foreign currencies, tohold U.S. foreign exchange and Special Drawing Rights(SDR) assets, and to provide financing to foreign governments. All operationsof the ESF require the explicit authorization of the Secretary of the Treasury("the Secretary").

The Secretary is responsible for theformulation and implementation of U.S. international monetary andfinancial policy, including exchange market intervention policy. The ESF helpsthe Secretary to carry out these responsibilities. By law, the Secretary hasconsiderable discretion in the use of ESF resources. 

The legal basis of the ESF is the Gold ReserveAct of 1934. As amended in the late 1970s, the Act provides in part that"the Department of the Treasury has a stabilization fund ….Consistent withthe obligations of the Government in the International Monetary Fund (IMF) onorderly exchange arrangements and an orderly system of exchange rates, the  Secretary, with the approval of the President, may deal in gold, foreign exchange, and other instruments ofcredit and securities."

GATA calls the forcethat is behind the price suppressing scheme of the gold market “The GoldCartel”. Who are the main partners in this “Cartel” and how are theyorchestrating their operations without the broader public taking notice of it?

I think I answered this one already.Nevertheless, as far as GATA is concerned, we are used to beingshunned, no matter how right we have been for a decade now, as gold hasrallied  NINE years in a row.  It all began ten years ago when somehow I goton CNBC and was interviewed by Ron Insana. Once they heard what GATA had tosay, we have not only been blackballed by CNBC, but by most all of the USfinancial market press. We have hardly ever been mentioned no matter how muchwe contact the press, or send blockbuster information to them. It is like there is a black hole outthere when it comes to what GATA has to say.

The bottomline is that there is NO free financial market press in the US.They are a fraud in that regard and have contributed greatly to the financialchaos of the day with their refusal to cover one of the most significantfinancial market stories in recent years … that being the suppression of thegold price. The richand powerful don’t like being challenged and the US financial press is petrified ofoffending them.

One person that you “like”is former US-Treasury Secretary Robert Rubin. You stated in the past that thewhole rigged game was developed by him when he was working in London for Goldman Sachs adecade before. What was the basic innovation that Rubin came up with and how doyou know about that exactly?

Beforehe was CEO of Goldman Sachs and then US Treasury Secretary, Robert Rubin workedin London for Goldman Sachs. One of his duties was to oversee their gold tradingoperations. We know this because the CEO of GATA supporter Kirkland Lake Gold,Brian Hinchcliffe, worked in Londonback then for Goldman Sachs and reported directly to Robert Rubin. 

Thiswas many years ago and interest rates in the US were very high, say from 8 to 12%. Rubin had Goldman Sachs borrow goldfrom the central banks, sell it in the physical market and use the proceeds tofund their basic operations They could do so at about a 1 % interest rate. Thiswas like FREE money, as long as the price of gold did not rise to any sustaineddegree for any length of time.

Soonother major financial institutions realized what GS was doing and copied them.Rubin continued these operations as the Goldman Sachs CEO and then took it to anew level as US Secretary Treasurer. The gold price suppression scheme becamethe lynchpin of his widely acclaimed "Strong Dollar Policy."

In the late 1980’sanother future Treasury Secretary, Lawrence Summers, wasdedicating his time as Professor at Harvard also on the inter-relation betweengold and interest rates, wasn’t he?

GATA’sReg Howe caught on to this notion in a paper titled, "Gibson’s Paradox andThe Gold Standard," co-authored by Lawrence Summers in 1988. Summers, aprofessor at Harvard at the time, succeeded Rubin as US Treasury Secretary. Thebottom line of Summer’s analysis is that "goldprices in a free market should move inversely to real interest rates." Controlgold and it will help to control interest rates. How disturbing to haveSummers, a man very responsible for America’s current market nightmares, backon the scene as Obama’s most significant economic advisor.

What is the motivationto keep interest rates low in the first place? Aren’t the long term riskshigher than the short term advantages? And do you see a direct connectionbetween artificially low interest rates and the current financial crisis withrespect to derivatives and the housing market?

The motives of “the cabal” are to give supportto the dollar, keep US interest rates lower than they should be, and to tonedown the widely watched US barometer of US financial market health, that beingthe gold price. After all, whenever the price of gold soars, it congers up talkof what? Too much inflation, a sinking dollar, or a crisis of some sort … allnegative for Wall Street and the incumbent administration. Therefore, “Shootthe Messenger” has been The Gold Cartel’s key mission for many years now.

The gold price suppression scheme has leddirectly to the financial market/economic crises that we face today. As aresult of what we knew, GATA warned what was coming in a full-page color adwhich we placed in the Wall Street Journal on January 31, 2008. The ad, titled “Anybody Seen Our Gold?” cost GATA$264,400.

The DOW was a little under 12,500 at the timeand very few in the investment world were prepared for the coming financialmarket/economic chaos in the US.

GATA was. I am going to read some copy fromthis very telling ad, one that I believe will become a CLASSIC in the yearsahead … AFTER the gold market blows up.

It opens with…

“The gold reserves ofthe United States have not been fully and independently audited for half a century. Nowthere is proof that those gold reserves and those of other Western nations arebeing used for the surreptitious manipulation of the international currency,commodity, equity, and bond markets.”

Now, anybody who has watched the DOW rally backin the last half hour to hour via The Plunge Protection Team’s Hail Mary playknows how true that is. When the market is in serious trouble, the PPT (TheWorking Group on Financial Markets) continues to prop it up late in the day,often floating rumours which mysteriously disappear the following morning.  By the way, how many of you have heard of theCounterparty Risk Management Group?  Do aGoogle and you will find another Goldman Sachs market rigging domain.  It is so telling about how the INSIDERSoperate.

Later in the ad copy…

"The objective of this manipulation is to conceal the mismanagementof the US dollar so that it might retain its function as the world’s reservecurrency. But to suppress the price of gold is to disable the barometer of theinternational financial system so that all markets may be more easilymanipulated. This manipulation has been a primary cause of the catastrophicexcesses in the markets that now threaten the whole world."

… and then…

"Surreptitious market manipulation by government is leading theworld to disaster."

And this justwhat happened later last year!!!

Had gold beenallowed to trade freely, the price would be sharply higher than it is now. Ifthe price had been allowed to trade freely to keep up with true USinflation, the price would be over $2,000 per ounce, according to mostanalyses. Interest rates would have also been sharply higher years ago, therebycurbing many of the excesses which have led us close to a second GreatDepression.

How do banks likeGoldman Sachs, JPMorgan Chase and the Deutsche Bank AG profit from those activitiesin the gold market? Why do they take part in all of this?

Borrowed central bank gold is virtually freemoney. That was a big deal years ago when interest rates were much higher.Then, as agents of the US, they are able to fleece spec longswhenever they are ready to attack from the short side, aided by physical goldbeing dumped on the market. Time and time again technical spec longs are sentrunning for the hills and the Gold Cartel covers when they sell. $20 here, $100there. It adds up over the years.

In addition, gold is a small market compared toother major financial markets. Getting the inside scoop on what is going tooccur is invaluable to their overall trading operations. Goldman Sachs hasbecome commonly known as “Government Sachs” for a reason. The number of GSpeople who have gone on to the US Treasury is astounding. And most everyoneknows JP Morgan is the Fed’s bank.

Can you describe indetail how the leasing and swap operations are put in place in order to pressurethe price of gold? How many players does it take to carry this day-to-dayprocess out? And furthermore how are those activities integrated between whathappens in New York at the Commodities Exchange (COMEX) and the London PM Fix?

No, I don’t know exactly who gets what orderand when, but it is not necessary. We have witnessed the price action for morethan a decade and it is clear what is transpiring. Recently, ahead of US Treasury auction, gold tradedEXACTLY the same way on the three days of the auctions. Going down into andthrough the COMEX openings after trading higher overseas.

Three other noticeable trading patternsinclude…

*Plan A – to pressure themarket as soon as The Gold Cartel traders report to work, which is 3 AM NYtime.

*Plan B – to pressure the market as soon as thePM Fix is concluded in London, or after the physical marketpricing is over for the day.

*Plan C – to pressure the price in the lightlytraded Access Market, which opens after the COMEX closes for the day.

One point: my guess is there are VERY fewpeople in any one particular organisation who are part of the manipulationscheme … that know what is really transpiring.

One main protagonistof the past, former Federal Reserve chairman Alan Greenspan, stated in July1998 before the US House Banking Committee:

“Central banks standready to lease gold in increasing quantities should the price rise.” 1 

You believe this isexactly what the central banks have done?

They sure have. That simple. Although a numberof them are getting cold feet. Central bankers are sheeples. They don’t want tobe seen squandering what gold they have left in this precarious financialenvironment, which is why the European central banks have sold zilch the pastmonth … when they could be selling hundreds of tonnes and still be in line withthe Washington Agreements, first put into existence a decade ago.

What was the role ofthe German Bundesbank at that time? For example there are continuingrumours related to Germany’s gold reserves. Max Keiserpublished recently a documentary entitled "Brown's Bottom" in whichhe stated that the total amount of Germany's gold reserves are stored in the United States:

"Themost fascinating thing I've heard is that all the gold in Germany is in New York." 2

He also said that he received this information inMarch 2008 from officials at the German Bundesbank. Which information does GATAhave about the question where Germany's gold is located?

It appears there is a greatdeal of commotion behind the scenes in Germany about your gold reserves … onevery opposed to mobilizing Germany’s gold and one that has been for it.Somebody in Germany wanted to stir upthis issue nearly ten years ago when out of nowhere, there were back to back,unpenned articles in the Frankfurter Allgemeine Zeitung, like the one fromAugust 25, 2000. Your readers can find this article at GATA’s web site underthis link: http://www.gata.org/node/4226.

There is a great deal ofcontroversy in our camp about where the 3400 tonnes of German gold is. GATASecretary/Treasurer Chris Powell recently issued a missive which included thefollowing:

Germany's gold is in U.S. custody,Bundesbank confirms

International journalist Max Keiser has justposted a nine-minute documentary he has done about the British government'sgold sales that were begun in 1999 and now are disparaged as "Brown'sBottom," after then-Chancellor, now-Prime Minister Gordon Brown, whodecided upon the sales and remains unashamed that they marked the bottom of thegold market. Keiser's documentary is based largely on an interview withConservative Party opposition Member of Parliament Phillip Hammond, who isshadow chief secretary of the treasury and who remarks that the British goldsales seem to have been structured precisely to knock the price of gold downrather than to maximize the return to the British government. Hammond also wonders aloud whether"something other than achieving the best price" might have been theobjective of the gold sales scheme.

But Keiser's documentary may be sensational forgetting an acknowledgement from the German central bank, the Bundesbank, that Germany's gold reserves are actually in thecustody of the United States. This is a detail the Bundesbanklong has denied to others who have inquired and is potentially a matter ofgreat controversy in Germany. It raises the question of whetherthe German gold reserves are actually intact at all or whether they have beenused by the U.S. government as part of its long-time gold price suppression scheme orhave been comingled and diminished with the gold reserves of other countriesheld in the United States.

While Keiser's documentary does not identify theBundesbank spokesman who confirmed the transfer of the German gold reserves to New York, it does provide the date andlocation of the confirmation: March 17, 2008, at Bundesbank headquarters in Frankfurt. The documentary shows that Keiserwas there and got the interview.

After his interview at the Bundesbank, Keiserremarks: "The most fascinating thing I've heard is that all the gold in Germany is in New York." Indeed.

How long is this riggedgame that you were talking about going on by now according to the research doneby GATA? And has it changed since Barack Obama is US-President? Or is it morethan just coincidence that Lawrence Summers is his top economical advisor?

The Gold Cartel has most likely been managingthe gold price since Robert Rubin become Treasury Secretary in the Clinton Administration. Now that Summers isthe man behind the scenes, nothing has changed. Worse, the Treasury Secretarynow is Timothy Geithner, who heads the NY Fed, a bastion of the gold pricerigging operation.

If all of this is truethen the central banks wouldn’t have 30.000 tons of gold in their vaults as itis reported. What is GATA’s estimation of the real numbers and how do youreached those conclusions? Can you explain also your concerns related to theswap policies of the International Monetary Fund (IMF) in this context?

Years ago GATA consultants Frank Veneroso,James Turk, and Reg Howe, all using different methodologies, came to the sameconclusion: that the central banks had far less gold in their vaults than theysaid they did. Even though some central bank gold has been restored as goldproducer hedgers covered their forward short positions (2700 tonnes), thecentral banks still have less than half of the 30,000 tonnes they say they havein their vaults.

The good news is The Gold Cartel is graduallyrunning out of enough available central bank gold to keep up with demand. Wehave a price explosion coming soon. Why….

*The European Banks have been withdrawing assellers. They have sold next to nothing the past many weeks.

*The Russians revealed recently they arebuyers.

*The Chinese are buying QUIETLY … and arelikely to accumulate gold reserves at a rate of 300 tonnes per annum over thecoming years.

*The supply/demand deficit is over 1,000 tonnesper year. The Gold Cartel needed other central bank gold to meet that deficitand they are dwindling away to nothing.

The last official auditof the US gold reserves took place during the years of the Eisenhoweradministration in 1955. What has GATA done in order to find out what is left inthe United States Bullion Depository and what has been theoutcome?

I would also like totalk a bit with you about two independent reports that seem to support GATA’sfindings that the gold price is kept artificially low. The first was publishedin August 2004 by the “Sprott Asset Management”, a firm based in Toronto.3What did they say in their report entitled: “NotFree, Not Fair: The Long-Term Manipulation of the Gold Price”?

Their report was extensive and supports whatGATA has to say throughout. Eric Sprott is one of GATA’s staunchest supportersand came to our Gold Rush 21 conference in the Yukon’s Dawson City in August 2005. Sprott StrategistJohn Embry (who presented at GR 21) is one of the most highly regarded men inthe Canadian gold industry and was instrumental in the findings of that report.

The other report thatcomes outside of GATA is “The Role ofGold in the Unified Gulf Cooperation Council Currency” written by Eckard Wörtz for the Gulf Research Center.4Can you tell us about the conclusions of this report, too?

GATA released the following inMarch of 2005:

DALLAS--(BUSINESS WIRE)--March 3, 2005--A study published by a researchfoundation in Dubai has endorsed the Gold Anti-Trust Action Committee'sfindings that Western central and commercial banks have rigged the gold marketbut have much less gold than they claim to have and so are vulnerable to risingdemand for gold. The study recommends that the oil-producing countries of the Middle East diversify their ever-depreciatingU.S. dollar holdings into gold.

The study, "The Role of Gold in the Unified Gulf Cooperation CouncilCurrency," was written by Eckart Woertz, vice president of CFC Securitiesin Dubai, for the Gulf Research Center. It quotes the work of GATA'sconsultants, including Frank Veneroso, and predicts that the gold pricesuppression scheme of the Western banks will fail just as their similar schemeof the 1960s, the so-called London Gold Pool, failed when the drain on Westerngold reserves became too great. Once the scheme fails, the study says, "itwill be highly difficult and expensive to accumulate a gold reserve. This isespecially true for central banks that have low gold reserves like those in theGulf Cooperation Council countries."

The study concludes: "The paper dollar standard is a dead man walking. Itsdebt, accumulated over the recent decades, is too high to be effectivelyrepaid. It will either default or be inflated to such an extent that it willnot 'hurt' to pay it back. Therefore, the accrued imbalances in global financeand the inherent weakness of worldwide growth models that rely on a continuanceof U.S. deficit spending are likely to usher in aserious crisis of currency systems in coming years…

The status of theUS-Dollar as reserve currency of the world is the only thing that remains fromthe US economical power of the past. This status is secured since the 1970’sonly because crude oil is paid in US-Dollars. If taken into context with thementioned report by Eckard Wörtz, even this status linked to oil is injeopardy, isn’t it?

All I can say is there has been a great deal ofeffort and talk lately to reduce the status of the dollar as the reservecurrency … emanating from France to Brazil. If the dollar tanks in the comingyear, as I suspect, certainly the link to oil will be in great jeopardy.

Could you also saysomething about China’s gold reserve policy during the last years? Didn’t China become increasinglyactive to accumulate physical gold exactly because the US-Dollar is a “paperasset” that loses its value? The Chinese use the low price of gold as long asthey can whereas the West is getting extremely vulnerable?

Over the past 18 months I have been a part ofthree conference calls with the Chinese Investment Corporation, one of theirSovereign Wealth Funds. They wanted to know what GATA knew about the goldmarket and our opinion what was coming price-wise and why. We still don’t know whatthey are doing, or will do.

This year China announced they had quietlyincreased their gold reserves by 454 tonnes. In 2005 one of our GATA supportersreported the Chinese stealthily bought 510 tonnes of gold. We were pretty closeto nailing the real deal years in advance … when it was occurring.

I mentioned the following in my commentary thispast April…

GATA’s credibility took another leap forwardthis morning when China announced it has increased its goldreserves to 1,054 tonnes from 600 tonnes. For years and years and years GATAhas claimed that the gold world establishment has failed to account forsurreptitious gold lending operations by The Gold Cartel to suppress the price.For there to be greater gold supply hitting the market, there had to be greaterdemand to satisfy this undisclosed supply. As a result of Frank Veneroso’sbrilliant supply/demand work in years past, we mentioned that one of the demandareas, that the likes of a GFMS was not accounting for, was China, and thatsomeday their stealth buying would be reported. Voila…

China gold reservesapparently doubled

HONG KONG (MarketWatch) -- China has added to its gold reserves andnow holds 1,054 metric tons of the yellow metal, according to a Friday reportby the Xinhua News Agency, which cited comment by Hu Xiaolian, head of theState Administration of Foreign Exchange.

Hu said that China's gold reserves had risen by 454metric tons since 2003 and that the total was being reported to theInternational Monetary Fund as per the organization's rules…

According to my sources, China will be in the market for years tocome and will be buying in size and as quietly as possible.

This trend shown byChina and countries in the Middle East will gain even more momentum when itbecomes clear to everyone that hyperinflation will come to the U.S.A., am Iright? 

YES!

Compared to eightyears ago the price of gold has gone up three times against the dollar. If onewould use a multi-year long perspective on things, one would come up with theconclusion that gold is the best store of wealth. Nevertheless, you say thatthe price of gold would be much higher without the market rigging techniquesthat we talked about?

True on all counts. It is critical to know whatGATA knows to appreciate what is coming down the pike. Gold has now gone up 9years in a row. The Gold Cartel has been MANAGING a retreat and keepingexcitement to a minimum in the process … which is why the bullish sentiment withgold above $950 is so low today.

But, they are soon about to hit the wall, asmentioned above. We are at the Tipping Point in which physical demand buyingoverpowers supply. Once gold takes out $1,000 and stays above that level for aweek or so, it is likely to explode. We are getting so close to that day.

There were twostatements recently that I found quite interesting for the future developmentsat the gold market. Puru Saxena, the publisher of the “Money Matters“-report, said for example this:

“It is interesting tonote that only 160,000 tons of gold has ever been mined from the face of thisplanet and at US$950 per ounce, it is worth US$4.9 trillion.  Now,consider that the total amount of paper money in circulation (currencies,savings, deposits, money-markets and CDs) is worth US$60 trillion orapproximately twelve times the value of the gold in existence.  Now, thereis no doubt in my mind that as world governments debase their currencies, manypeople will begin to question the viability of paper money as a store of valueand they will turn to gold, silver and platinum.  Even if a small fractionof paper money rushes towards the small gold and silver markets, what do youthink will happen to their prices?  No question, precious metals’ priceswill explode!”5 

Can you comment on this and put itmaybe into the context that mining supply is decreasing?

He is correct. Mine supply has been contractingfor many years and continues to head south … and there have been very few majordiscoveries to replace depleting mine supply. Most people don’t realise gold isway too cheap. They think gold is too expensive at $1,000 and is going tocollapse. Not so. It will take a gold price of about $1500 for the industry tobe really profitable as a whole. If a producer is going to start from scratch,building new infrastructure, etc., it will take a $2,000 gold price.

The other statement was coming fromFrank Holmes of “U.S. Global Investors Inc.“ who said under the headline “Why now could be the right time for goldstocks“:

“Another bullish indicator for goldand gold stocks is that, for the first time in my 20 years at U.S. Global Investors, pension fund consultantsand other gatekeepers for large institutional investors are advocating anexposure to gold.

These gatekeepers have influenceover managers of many hundreds of billions of dollars in retirement funds, andthey are advising a 5 percent to 8 percent allocation to gold, which is similarto the long-term exposure suggested by U.S. Global.”6

Can you comment on this, too?

Frank is one smart cookie and a quiet GATAsupporter. I see gold becoming the GO TO investment in the months and year tocome, even among the Wall Street crowd. The market cap of our sector is verytiny compared to others. Thus, just a shift in thinking among a number of majormoney managers could send the shares flying. When the public jumps on board,all boats will be lifted. Ten baggers among the VERY suppressed shares of thejunior and exploration companies will be common.

Mr. Murphy, you have beena successful commodities trader before launching  LeMetropleCafe.com. Therefore I think you knowa good deal about COMEX. I mention this because Trace Meyer and Avery Goodmansee the danger on the horizon that COMEX might fail to deliver gold with respectto the rapidly grown size of future contracts.7The Deutsche Bank AG seemed to have shown some difficulties to deliver gold onCOMEX already.8 What are yourexpectations?

It is possible but a COMEX default would be adisaster for our financial markets. There never has been one and thecredibility of our exchanges would come into question … especially after GATA’sclaims all these years that the gold and silver markets have been rigged.

What is yourexperience with the Commodity Futures Trading Commission (CFTC) when it comesto the gold market?

They seem to be everywhere these days except inthe most important issue of all: the rigging of the gold and silver marketsaided by the extremely concentrated positions of a few shorts, like JP MorganChase. Instead they are jumping up and down about grains and oil.

At the G20 Summit thatwas held in April of this year in London there was a plan announced that theIMF should sell 403,3 tons of its gold to supportThird World countries in these times of crisis via concessional loans. What isyour point of view on this? Is this just marketing blather of some kind, and ifso: what is the real deal?

Nobody knows how this is going toplay out. The Gold Cartel is desperate for gold so there will be intensepressure to get the US Congress to approve thesale, which must happen. However, if my info is correct, there is a stronglikelihood the Chinese will take it all for themselves.

Mr. Murphy, one lastquestion. The biggest opponent that GATA has chosen to fight against is theFederal Reserve. Could it be that a lot of problems that you were talking aboutin the gold market take place because the Fed isn’t really a federal agency? Incase it is true that the Federal Reserve System is “a consortium of very largemultinational banks,”109  isit then any wonder that they seek to satisfy their interests instead those ofthe broader population? Isn’t this the main problem behind the problem thatGATA is up against?

It certainly is a main one. Of extreme interestto us is Ron Paul’s HR 1207 bill to audit the Fed. More than 280 members of theHouse have signed up as co-sponsors. Barney Frank, who chairs the HouseFinancial Services Committee, has been holding up its progress as a committeechairman. But, he now says the House will pass this bill.

IF the Fed is really audited, there will mostlikely be some stunning revelations regarding their activity in the gold marketand might reflect on the status of US gold reserves. ANY activity, or lesseningof official gold reserves, will be a bombshell of epic financial proportions.

To conclude, the price of gold is going to$3,000 to $5,000 per ounce. You can take that one to the bank.

Thank you very much for taking your time, Mr.Murphy.

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