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GATA, streetTRACKS GLD Fund, The Bullion Desk & the "D2 Paradox"

December 09, 2004

D2 is a supporter of GATA, for obvious reasons. We believe gold needs to be freed from the manipulations of central banks, private mega banks, private special interests, bank-owned/operated major gold extractors and government interventions - - and that freeing gold will bring a level of decency & honesty back to the business world not seen since the mighty Socialist Roosevelt confiscated the gold of US citizens.

There is a seeming correlation between the gold price and eroding business ethics, lets call this the D2 Paradox - - whereby gold moves in the inverse to business ethics!

Gold Up means Ethics are Down: GU = ED

In the eternal struggle for truth, in all things gold, GATA has stuck to their guns and has engaged some of the biggest economic forces in the world today. Now they are going after complete transparency and full disclosure with the new streetTracks gold ETF [GLD]. Below you can see the latest skirmish in the battle between the forces of globalization, manipulation and central control of pretty much everything you hold dear vs. the voice of sanity, decency & freedom through the organization known as GATA.

GATA needs help - do what you can.

++++++++++++++++++++++++++++++++++++

Dear Friend of GATA and Gold:

TheBullionDesk.com today more or less accused
GATA of causing today's smashing of the gold
price. The accusation came in a brief market
note by the site's proprietor, Ross Norman,
suggesting that the World Gold Council's new
exchange-traded bullion fund had been forced
on Tuesday to sell 15 percent of its gold
holdings on account of "a foul attempt by a
rival to raise ill-founded concerns about the
product" -- that is, GATA's call this week for
the council to explain the duplicate serial
numbers on some of its gold bars and to answer
several questions about the fund's operation.

Reuters and Dow Jones Newswires distributed
reports about the huge dishoarding by the EFT.
Here's the Dow Jones story.

* * *

Fall in StreetTRACKS' Stock
Encouraged Gold Slide: Trade

By David Elliott
Dow Jones Newswires
Wednesday, December 8, 2004

LONDON -- The 3.5 percent fall in the price of
spot gold Wednesday may have been encouraged by
the sale of 15 percent of the gold held by the
StreetTRACKS exchange-traded fund, or ETF,
analysts in London said. The total net asset
value of gold in the trust stood at 88.02
metric tons Wednesday against 103.56 tons
Tuesday.

Gold fell to $436.90 a troy ounce at the London
fix Wednesday afternoon against $451.80/oz
Tuesday afternoon.

While most participants agree the market was
primed for a slide -- in light of an overbought
technical picture and a bounce for the dollar --
they also believe the fall in tonnage in the
StreetTRACKS trust was responsible for some
of the selling.

The fall in the StreetTRACKS tonnage highlights
the expectation by holders of the shares that the
share price and price of gold is set to fall,
said an analyst.

"It hasn't helped sentiment," said Kamal Naqvi,
precious metals analyst at Barclays Capital.

StreetTRACKS gold shares were launched Nov.
18 on the New York Stock Exchange to track
the price of gold. Each share represents
one-tenth an ounce of gold.

In the first week of trade to Nov. 26 the trust
built up a total net asset value of just over
100 tons, but since then this remained virtually
unchanged until the decline Tuesday.

Over the same period the share price for the fund
has also remained steady, closing Tuesday at
$45.11 compared with the close on the first day
of trade at $44.38. At 1626 GMT Wednesday the
shares were trading at $43.62.

"Gold was primed for a correction but it seems to
me an interesting correlation that the
StreetTRACKS tonnage fell at the same time,"
said Philip Klapwijk, managing director of GFMS
Ltd.

The StreetTRACKS Web site says the tonnage in the
trust for Wednesday will be updated between 1615
and 1630 EST.

* * *

The Bullion Desk's blaming GATA for the
gold crash was followed there by the
unusual posting of an open letter to your
secretary/treasurer by a Bullion Desk
reader, David Walker. The open letter
carried a preface declaring that the
Bullion Desk fully endorsed its views.

Walker's letter at the Bullion Desk can
be found here:

http://www.thebulliondesk.com/content/reports/temp/AnOpenLettertoGATA
.pdf

Walker echoed the Bullion Desk's own
complaint that GATA had wrecked the gold
market by criticizing the gold council's
ETF, and he attempted to answer the
questions GATA had directed to the gold
council.

As authority of one of his answers,
Walker wrote that he had spoken with a
representative of the ETF, but when I
briefly engaged him by e-mail and asked
him if he was speaking for the fund or
the World Gold Council, he did not reply.
So it may be suspected that Walker's
letter was more or less ghosted for him
or that he is serving as an intermediary
for the fund or the council so that the
council might not have to engage directly
with people who press inconvenient
questions.

Later Walker's open letter was posted at
321Gold.com here:

http://www.321gold.com/editorials/walker/walker120804.html

While GATA's questions about the ETF's
operations are still compelling -- and will
be reviewed again below -- the most remarkable
thing here is the old pattern of gold-news
Internet sites to avoid at any cost doing
real reporting on the gold market. For all
the space devoted to bashing GATA today
at the Bullion Desk and 321Gold, neither
of those sites, nor any other gold sites
to GATA's knowledge, has ever directed a
single question to the biggest participants
in the gold market, the central banks. Nor
do these sites seem inclined to question the
gold council directly even though its ETF
has been heavily publicized for months.

The Bullion Desk said today that it fully
endorsed Walker's letter about the ETF, but
how could the Bullion Desk do so without
doing or referring to any original reporting
on the fund? Would a Q&A with the gold council
or the fund's managers be so out of line for
the Bullion Desk? To most people it might
look like basic journalism.

Indeed, the greatest deficiency of the gold
market and the financial markets generally
may be the lack of basic journalism --
journalism that goes beyond the recycling
of press releases and government statements.

But to return to GATA's questions, and to
assume that Walker is acting as intermediary
for the ETF and the gold council:

1) Why does the bullion fund list ownership
of duplicate gold bars?

Tim Wood's admirable reporting last night
at ResourceInvestor.com, notice of which
was dispatched to you, seems to have
resolved this question, if only
unofficially, since the gold council still
does not speak directly. Different bars
refined by Johnson Matthey apparently carry
the same serial numbers and the ETF listed
the duplicate numbers without explanation,
thus erroneously suggesting double counting.
That is, the fund's practice was deficient,
was fairly questioned, and required
explanation.

2) Why have all the custodians and potential
custodians of the fund's gold not been
identified?

Walker contends that they all HAVE been
identified and quotes the fund's prospectus:
"The subcustodians selected and used by the
Custodian as of the date of this prospectus
are: the Bank of England, The Bank of Nova
Scotia (ScotiaMocatta), Deutsche Bank AG,
JPMorgan Chase Bank, and UBS AG. The
Allocated Bullion Account Agreement provides
that the Custodian will notify the Trustee
if it selects any additional subcustodians
or stops using any subcustodian it has
previously selected."

But note that to notify the trustee is not
necessarily to notify the investing public
as well. Is it possible that ETF gold could
be stored with other custodians without
immediate notice to investors?

3) Why is the fund refusing to let its gold
holdings be fully and publicly audited?

Walker denies that the fund is refusing full
and public audits. But then he writes that
there indeed might not be audits if gold is
placed with certain subcustodians:

"If 100 percent of the gold bars are held
directly by the Custodian, which is the
current situation, then there is provision
provided for a 100 percent audit by the
trust as found in the SEC filings:

"'The Trustee may, upon reasonable notice,
visit the Custodian's premises up to twice
a year and examine the Trust's gold held
there and the Custodian's records concerning
the Trust Allocated Account and the Trust
Unallocated Account.'"

"However in the event a subcustodian is used
it would be up to the Custodian to audit
subcustodians per any audit provisions between
the Custodian and the subcustodian. Any gold
held would be in allocated form, thus property
rights to the gold have been established. Since
it is intended that HSBC has 100 percent control,
all gold would be subject to 100 percent audit
directly by the Trust's auditors."

4) Is any of the fund's gold being leased, made
available for leasing, or encumbered in any way?

The best Walker can do here is assume that since
no risks of leasing are cited in the fund's
prospectus, there won't be any leasing. That's
a big assumption. How much more persuasive it
would be to get a simple, straightforward yes
or no directly from the fund rather than a guess
from an intermediary. Why should such a simple
question be so difficult?

5) Exactly what is the fund's relationship with
the Bank of England, a major lessor of gold?

Walker's answer is contradictory and
disingenuous and only validates GATA's concern:

"The Fund has no relationship with the Bank of
England. The Bank of England was listed as a
POTENTIAL subcustodian that the Custodian
MIGHT use in the normal course of business.
Certainly HSBC, being the largest LBMA
member, would more than likely have dealings
with the BoE from time to time. During my
conversation with the Fund representative, Mr.
David Smith, he mentioned that there has been
talk of discontinuing the BoE as a POTENTIAL
subcustodian."

That is, there is no relationship but the fund
prepared for a relationship and now that people
are concerned about it, the fund might not go
through with it.

* * *

Let it be said again: The mystery and
deception carefully woven around the world's
gold reserves are the foundation of gold
leasing, the suppression of the gold price,
and the manipulation of the gold market.

GATA favors anything that democratizes
and clarifies gold ownership -- which could
include an exchange-traded fund -- provided
that there is every assurance of the security
and custodianship of the gold involved and
the fund doesn't become just another
derivative for market manipulation.

So far the World Gold Council and its
associates in the ETF have not provided that
assurance, and intermediaries making arguments
for them will not be good enough. Indeed, the
use of intermediaries by the council and the
ETF can only tend to confirm suspicions that
the true answers are not good ones.

If the World Gold Council wants to speak for
gold, it will have to speak. It should speak
not only about its ETF but, more importantly,
about the open and surreptitious intervention
of central banks in the gold market, a subject
about which the council long has been
deliberately and disgracefully silent.

In the council's silence, GATA will do its
best to speak for gold.

Since the last two weeks have been full of
anguished public statements by central
bankers about currency intervention and
commentary by gold market analysts about
the likelihood of a sharp decline in the
gold price, it is absurd for the Bullion
Desk or anyone to attribute to GATA the
power to crash the gold market or any
market. Surely if we had such power we
would not have just crashed the gold
market down on our own toes. (More than
our toes, actually.)

But let's see if the Bullion Desk is right.
Here's fair notice: Once we get positioned,
we're going to see if we can do it again on
Friday, this time to the bond market, and,
if that works, on Monday to the South
African rand!

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

+++++++++++++++++++++++++++++

Would you buy stock in GLD?

Cheers Rich

Posted by richardlancaster at December 9, 2004 07:12 PM
Comments

Cheers for GATA and James Turk. The WGC has been consistently aligned with the forces of evil and gold price control. Would you suspect a leopard with stripes? The last thing that the anus bankers would like to see is a real ETF, which would only serve to harm them. That a suspect ETF would come into being at this time, from this angle, is a no brainer. GATA should start their own ETF. I would buy heavily. Isn't there an existing honest brokerage (like Penntrade) that could offer such a vehicle. Short term, I just made a donation to GATA

Posted by: Luke Newton at December 9, 2004 11:48 PM

Huh? What this fuss about? Why buy GLD when you can buy gold stocks or gold bullion (directly). Who cares if central banks trying to manipulate the price of gold -- bring it on!

Posted by: Goldfinger at December 10, 2004 05:34 AM

Goldfinger.

To very briefly answer your question with some news fresh off the wire this morning from GATA, here is an extract from the latest email bulletin:
++++++++++++++++++++
Tim W. Wood of the Cycles News & Views
newsletter writes at CBSMarketWatch that
gold has topped and should be sold on
account of its awful failure to keep pace
with the CRB Index of commodity prices as
gold did 25 years ago. Too bad that Wood
doesn't delve a bit into that anomaly and
consider whether the difference between
then and now may be central bank
intervention in gold market.

http://tinyurl.com/5423x
++++++++++++++++++++++++++++++

The manipulation holds the price of gold down and is attempting to break the age-old position of gold as the ultimate store of value globally. While I do believe this manipulation will be futile over the long-haul it is messing with investments in precious metals in the short term. When you consider that the banks that own the Fed system (the stockholders) are also the worlds largest and most profitable banks, have a controlling interest in some of the biggest extractors and short the gold mining stocks routinely - - then a pattern of who benefits and who loses emerges. The small guys lose the big guys win big.

Gold is being decoupled from it traditional role within the economy, one gold bar at a time. Gold acts as a canary in a coalmine in a fiat currency system, alerting the people to something being fundamentally wrong. It's also the constitutionally acceptable form of money, not ink on paper.

I wouldn't buy GLD, I buy individual minig stocks and some of the mutual funds like Toqueville and Gabelli.

Cheers Rich

Posted by: Rich at December 10, 2004 02:54 PM

I'VE GOT IT !! by FeelingWeird
from my Blog at FEELINGWIERD.BLOGSPOT.com

It finally dawned on me what they are up to, in the Bush administration! This maybe totally obvious to some, but the implications of it hit me like a brick wall. If you think about the two biggest events in the last century, as far as impact on the country and our rights, is the great depression and World War 2. What we may be witnessing is a one-two punch in reverse order of those two events. What started as a run of the mill depression was quickly turned into a world wide event of catastrophic proportions. The great depression's seeds were sown throughout the spendthrift 20's and culminated in 1929 with the fall of the stock market. But, that wasn't what killed this country, it was the asinine measures that were implemented in the years and really decade that followed. We were for all intensive purposes a limited dictatorship under Roosevelt. The deal was permanently sealed after December 7th 1941. Before that, there was a growing consensus that the New Deal was a colossal failure. With the bombing at Pearl Harbor all this was set aside and forgotten and by 1945 it was too late to pull back from those failures.

What we may be witnessing is a 1941 style attack coming first (9/11 of course), followed by an orchestrated monetary collapse of global proportions. If you think about it from their point of view this all makes sense, and even maybe you will see that they are doing this for the betterment of mankind (in their minds at least). Follow this logic. Bush comes into office with Dick Cheney, the first thing they do is to have a high level energy meeting. All the biggest names in energy are invited and no one from the outside is allowed to know what they are talking about. This had to be priority number one. Now if it came out in this meeting that indeed peak oil was foreseeable allot sooner than anyone had anticipated. Talk of China's voracious appetite would have had to be center of discussion. They would have had to have talked about the fact that Saddam was making deals left and right with Russia, China, France and Germany. From the American point of view this would be devastating. Allowing China and Russia to gain any type of foothold in Iraq would have to be their number one worry. This not only would put them on top of the 2nd largest reserve of oil on the planet, it would put them next door to the 1st and 4th largest (Saudi Arabia and Iran). From this point of view you can make the leap that without an invasion of Iraq, this would put our country in mortal danger and potentially cause the death of millions of American's somewhere in the close future (at the time it would have been 8 to 10 years).

But, how do you get from where we were to where they wanted to take us. We had to have known about the food for oil scandal even back then. Bush and Cheney knew that if the Iraqi embargo was left in place, it would be just a matter of time before Saddam got enough international pressure against us to drop it at the U.N. This had to be stopped at all costs. With an untapped Saddam selling oil to China and eventually Russia, this would put us at an extreme disadvantage and would put them on the ground next to Saudi Arabia. Make no bones about the intentions of China; they are out to displace us as the global leader. We must at all costs stop China from securing its energy needs.

Which brings us to 9/11 and the orchestrating of a world wide depression. 9/11 happens and immediately we get the good will of the world on our side as well as the bonus of a short lived domestic harmony. You can believe what you want about 9/11, either they did it, they orchestrated it, they allowed it to happen, or they are just opportunist who were at the right spot at the right time. It makes little difference what you believe. We were already in place to knock out the Taliban. We had troops on the ground in Uzbekistan before 9/11. My guess is that even if 9/11 hadn't happened there would have been a move to oust them and reignite the trans-Afghani pipeline. This would have been done to deny a pipeline route through mainland China and Russia. But 9/11 did happen and the plans are back on track for a pipeline through Afghanistan.

With all of this goodwill in tow, they set their final sight on Iraq. This was to be the big one. Afghanistan was a test, and one that went very well. I really don't think that the administration was surprised by the intensity of the fighting is going on in Iraq. If you think about it this way, it was critical for it not to be easy. It would seem to be invasion 101 that you don't disband an army that basically surrendered to you. You try and get them on your side and help them bring order to the country. The Bush administration claimed ignorance on that one and said it was a mistake. But really it wasn't, this was another calculated risk they took and it really is paying dividends. This is tying up Iraqi oil for the foreseeable future. We may not get it, but then again so won't the Chinese or Russians. And neither will they get their pipeline out of the lower Caspian basin as this will now go to the deep water ports in Pakistan through Afghanistan. With just these two events coupled with a worldwide financial meltdown, may put the final death nails in Russia and at the same time implode China in a hyper inflated mess, crushing them before they have a chance to rise to super power status.

It would be the military equivalent of a "Broken Arrow". The powers that be, may have seen the writing on the wall. If things stayed static, the U.S. as we knew it was going to end and with it their privileged lives would be made much harder. They called in an airstike on our position, knowing that we would take casualties but that our enemies would be destroyed in the process. It has kind of a putrid type of patriotism to it, if you think about it. What Bush is doing from his point of view is saving Apple pie, Baseball and the American way, the only way his type knows how. To lie, and kill all in the name of the greater good!!


Posted by: FeelingWeird at December 10, 2004 10:07 PM

I have been selling obsolete currency on ebay for two years and know that this obsolete currency once represented peoples hopes and dreams, as i also sell Weimar Republic banknotes as well. Here is a link to my ebay store below. All that you say about worthless paper money regimes is true and I have 568 examples of worthless notes to prove it


http://stores.ebay.com/PRO-INVIDIA-BANKNOTES_W0QQsspagenameZMEQ3aFQ3aSTQQtZkm

Thank you

George

Posted by: lindy at December 14, 2004 08:54 AM

Nice George!

Cheers Rich

Posted by: Rich Lancaster at December 14, 2004 05:17 PM

Any currency, including gold is worth nothing
without military power to back it.

If the next depression is upon us, stock
up on food, water, tools, clothing, gasoline
and ammunition. They will always be tradable for whatever power backed currency is available.

Those who trade their labour power for gold now may face starvation in the future. I think gold may well be an excellent short term investment, but when the sh_t hits the fan it won't be worth anything either. Where will you exchange it in the bombed out cities and riotous streets of the future?

N View

Posted by: Northern View at December 20, 2004 04:42 AM
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