1:09a ET Friday, September 14, 2001 Dear Friend of GATA and Gold: It's probably time to make contact with you after this week's horrific events in the United States, lest anyone get the misimpression that GATA's officers and consultants were too close to them. Thankfully, we weren't. God help those who were. We are Americans first, gold and anti-trust bugs second, and commenting about the impact of these events on the gold price while they were unfolding was the last thing we wanted to do. But life goes on, and patriotism requires that we go on, for our country's sake, as well as for our cause, so here we are again. You can follow the gold price as well as those of us at GATA can. If you've been doing that, you have seen that the latest Bank of England auction, conducted in the middle of the disaster, took the gold price up about $7 to $280, and that gold's exchange price was a good deal higher than that for a while. While this was not really much in comparison with the horror, it may have been an indication that the capacity of the governments and bullion banks to suppress the gold price has its limits and is reaching them. With the New York commodities markets disrupted and much of the Comex gold buried in the rubble of the World Trade Center and inaccessible for a while, controlling the gold price may get harder still -- or, perhaps more accurately, controlling it surreptitiously may get harder still. Government intervention aimed at stabilizing the financial markets was more or less done in the open this week and was openly called for, and this may get more obvious in regard to gold in the next few days. Of course the more obvious this becomes, the less useful it will be. Only fools are taking the long side of a paper trade in gold now, and because of this, eventually there may be no more paper trades in gold at all, just physical trades. In which case gold again may be recognized as scarce and precious, something quite different than paper. One has to laugh bitterly at the news media's repetition this week of the cliche that investors turn to gold as a haven in times of world turmoil. For those who offer this cliche are thinking, of course, of paper gold, and they don't seem to have noticed that paper gold is of limited use right now, not just at the corner of Broad and Wall but, in fact, everywhere south of 14th Street in Manhattan. That is, the New York exchanges are closed, the offices of many New York traders have been destroyed, and many traders themselves are dead in the rubble. And the horror was accomplished in just a couple of hours. No, paper gold may be of some use again someday if gold ever trades freely, without manipulation by governments and bullion banks, but only as one of several hedges against currency depreciation. The only gold that serves as a hedge against both currency depreciation and national catastrophe, such as the one experienced in the United States this week, is gold itself, the independent money. But, dear gold bugs, may God forbid that we should ever come to that. For if we do, even real gold will be horribly inadequate. Before making any use of it then, we'll need an arsenal and a private army to defend it. * * * The September 12 commentary of Michael Kosares, proprietor of www.USAGold.com, again seems to catch the essence of events, so here it is. * * * By Michael Kosares www.USAGold.com September 12, 2001 Gold ran up over $20 yesterday in the aftermath of yesterday's horrific events, and then gave up about half that gain in the wake of the Bank of England's gold auction earlier this morning. The auction was 4.3 times oversubscribed which, when stated another way, translates to the market being willing and able to absorb the next three auctions as well as this one at $10 over where the market was trading just a couple of days of ago. What this says to me is that when physical gold is available in size, price is not an object. When the underlying strength of the physical market for gold sinks in, along with the realization that the paper markets are being used to hold the physical price down, the public worldwide will become even a bigger buyer of the yellow metal than it already is. Obviously, the yellow is being held down for a reason, and we continue to believe that that reason is twofold: 1) as a palliative to the various currencies, the dollar included; 2) as a necessity for the unwinding gold carry trade, which owes thousands of tonnes of gold to various lenders. One group -- the bullion banks -- has institutionalized the paper restriction on the price, while the other, government and the central banks, stands by and watches without objection for its own reasons. What we learned yesterday -- all of us -- is just how vulnerable we all are to random and unpredictable events. Beyond the physical reality of the collapsed World Trade Center, we have the subtler reality of systemic vulnerability in the world financial and economic order symbolized by the devastating event. Americans are no more immune to the vagaries of financial stress than we are immune to terrorist invasion. That is not a pleasant reality to contemplate on top of everything that happened yesterday, but for some of us, it is a reality nevetheless -- a reality that must be contemplated and deal with. Washington Post columnist Paul J. Samuelson captured the essence of what's on many people's minds this morning: "What was destroyed yesterday was not just the World Trade Center and part of the Pentagon but American's serenity and sense of security. ... It will no longer be possible to maintain the illusion of invulnerability, and the change in attitudes and assumptions will have profound effects -- just what, no one can yet say. ... [America] has tragically lost much of the innocence and illusion of the past decade." * * * As for that innocence and illusion cited by Paul Samuelson, good riddance. The sooner we Americans take the world for what it is, the better chance we'll have to survive in it. And the bad guys aren't really so strong; they just don't believe that Americans will ever summon up the gumption their parents and grandparents had to on December 7, 1941. Most Americans don't have a clue right now about the sacrifices that soon will be required of them, nor of the blows they may suffer, like chemical and biological attacks on cities, attacks that may make this week's casualties look small. But in the belief that Americans will find the moral resources to prevail, just as they did in 1941, I'll share here a prayer of a poem from that era. * * * Invocation By Wendell Phillip Stafford O Thou whose equal purpose runs In drops of rain or streams of suns, And with a soft compulsion rolls The green earth on her snowy poles; O Thou who keepest in thy ken The times of flowers, the dooms of men, Stretch out a mighty wing above -- Be tender to the land we love! If all the huddlers from the storm Have found her hearthstone wide and warm; If she has made men free and glad, Sharing with all the good she had; If she has blown the very dust >From her bright balance to be just; Oh, spread a mighty wing above -- Be tender to the land we love! When in the dark eternal tower, The star-clock strikes her trial hour, And for her help no more avail Her sea-blue shield, her mountain-mail, But sweeping wide, from gulf to lakes, The battle on her forehead breaks, Throw Thou a thunderous wing above -- Be lightning for the land we love! * * * CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. -END- ------------------------ Yahoo! Groups Sponsor ---------------------~--> <FONT COLOR="#000099">Get your FREE credit report with a FREE CreditCheck Monitoring Service trial </FONT><A HREF="http://us.click.yahoo.com/MDsVHB/bQ8CAA/ySSFAA/WfTolB/TM";><B>Click Here!</B></A> ---------------------------------------------------------------------~-> Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
