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Mother of All Absurdities: IMF Gold Sale & Debt "RELIEF"

An Orchestration by the Four Horsemen of the Gold Apocalypse

G7 Gold Sales

A Yahoo communiqui on June 12, 1999 is painfully demonstrative of the outrageous audacity of G-7 nations to nurture and perpetuate the cancerous lie surrounding gold. This monumental act of deception plays in sinister and harmonious concert with the manipulative group so guilty of price-fixing the shinny yellow during the past several years!

I mention here only the essential parts of their most recent attempt to deceive and mislead. Following their blatant and malicious effort to distort what is really going on, I will present an irrefutable argument, which will peel the masking skin from this rotten onion, so we may all see the deceit and smell its putrid stench.

"FRANKFURT, June 12 (AFP) - Group of Seven (G7) finance ministers reached agreement here Saturday on a plan to ease the debt of the world's poorest countries, including the sale of some 300 tonnes of IMF gold."

"Ministers gave few details on the debt agreement after a one-day G7 meeting here, because the proposal is due to be announced at the three-day G8 summit (the G7 plus Russia) beginning in Cologne on Thursday."

"The world's 41 poorest countries have debts totaling more than 200 billion dollars."

"German Finance Minister Hans Eichel also told a news conference that the G7 members had finally agreed to sell about 10 percent of the International Monetary Fund's gold reserves to help fund the Highly Indebted Poor Countries (HIPC) debt relief initiative."

"There will be a very limited amount of (IMF) gold sales, 10 million ounces (i.e. 300 tonnes)," German Finance Minister Hans Eichel told a news conference after a one-day G7 meeting here." (End of essential G7 comments)

Critique of the June 12th G7 Subterfuge

The "benevolent fathers" of G7 announced they will "generously'' sell 300 tonnes (exactly 9.6 million ounces) of IMF gold in order to provide debt relief to the Highly Indebted Poor Countries (HIPC). Subsequently, the illustrious "benevolent fathers" indicate: "The world's 41 poorest countries have debts totaling more than 200 billion dollars." Whooooooo there! Let's step back and take a careful and critical look at this seemingly "generous" offer.

Assume the "benevolent fathers" sell 10 million ounces next week at the current price of about $260/oz. That will provide the outwardly appearing prodigious sum of $2.6 billion. But HEY, the Highly Indebted Poor Countries owe a whopping $200 billion. The so-called "debt relief" ain't even a spit in the bucket. HELL, it is more like a spit in the Pacific Ocean.

Let's be even more specific. The "generous" offer of the "benevolent fathers" to provide $2.6 billion debt relief is a mere 1.3% of the total $200 billion debt (2.6/200). FURTHERMORE, disingenuously named "debt relief" of $2.6 billion is not even a FRACTION of one year's interest on the $200 billion loan principal. Third-world countries are considered high risk, which must be reflected in the interest they pay on loans. This increased risk interest is traditionally 200 basis points (2%) above the coupon rate of US Treasuries - which is currently at 6%. Consequently, the HIPC are paying about 8%. And 8% annual interest on $200 billion is $16 billion - fully SIX TIMES MORE than the "generous" debt relief offer of the "benevolent fathers."

Think of the audacity of the deceitful announcement. The "generous" debt relief offer will not even pay TWO MONTHS INTEREST ON THE DEBT of $200 billion!

It is too painfully clear that the IMF Gold Sale announcement on June 12th is a blatant undertaking to mislead and to bamboozle the general international public. The real purpose of the announcement is obviously to further force the price of gold down. Moreover, it is not inconceivable that the gold to be sold will mysteriously find its way back to some hapless Central Bank, which "leased" the gold to a Bullion Bank or to a gold mining company - neither of which can return the actual bullion - since it was already sold to someone else (see Mr. Butler's numerous reports on the subject, which prove beyond a shadow of doubt that Central Bank gold "leasing" is really a SALE). CONSEQUENTLY, it should be obvious to all that the stated purpose of the IMF gold sale is bogus and nothing more than A SHAM.

Internet Rumour

While I was writing this report someone posted information on the Internet stating the gold sale proceeds were not going directly to the amortization of the outstanding debt. Instead, the sale proceeds would be invested - and only the interest thrown off would be applied to reduce the debt of the HIPC.

This has not yet be verified. But its ramifications are stupendously incredulous in a negative sense.

Following is how I understand the upshot of the Internet information. If the IMF's 10 million ounces were sold at the current market price, it would net about $2.6 billion. Invested at 6% throws off $156 million - comprising the entire annual "relief" - which would be applied to the HIPC outstanding debt.

It is too utterly fantastic. It is sublimely incredulous.

This so-called "RELIEF" amounts to the gross absurdity of a preposterous 78 cents off for every $1,000 of loan principal. Can you imagine the sublime ridiculousness of this effrontery to one's intelligence. But please be advised that I have not yet been able to determine the veracity of this Internet information. HOWEVER, if indeed true, heads should roll at the IMF - and those less guilty should be tarred and feathered.

The IMF communiqui insults the intelligence of every man with their asinine statements like that found at the web location below. The draconian absurdity of the announcement gives rise to the growing suspicion the Managing Director of the IMF, Mr. Michel Camdessus, suffers from acute dementia or progressive senility. To the contrary, one is forced to conclude Mr. Camdessus is an integral part of the cabal, manipulating gold prices during recent years. In essence he is in cahoots with the gold manipulators. And if proven guilty, he should go to jail.

The Four Horsemen of the Gold Apocalypse

Death War Famine Pestilence

Greenspan Rubin Camdessus Munk

http://asia.yahoo.com/headlines/120699/business/929202900-90612155541.businessworld.html

KeyserSoze at Gold Eagle

14 June 1999

-- Andy (2000EOD@prodigy.net), June 18, 1999

Answers

Andy, here are some folks that don't think this sham will work:

Third World Debt Relief Rally

Ray

-- Ray (ray@totacc.com), June 18, 1999.

Sounds like a good way to drive down the price of physical gold so as to be accumulated by those with deep pockets and a penchant for exposure to inside information.

I would suspect there are hedge funds shorting gold in the futures market right now that absolutely cannot afford the metal to rise a few % without the rest of their portfolio imploding.

The IMF, BOE, FED, G7, LBMA all appear very frightened of something the general population is not privy to, hence the incongruous statements recently spilling forth hoping no one will question their veracity.

-- Mike T. (anita_martini@hotmail.com), June 18, 1999.

i read'somewhere' the day will come when' a-bag-of-gold'for a loaf-of-bread.

-- al-d. (catt@zianet.com), June 18, 1999.

MikeT, you hit the nail on the head. The amount of leased gold is astronomical. If those that play the leasing game were required to return this gold when their leases were up the price of gold would sky rocket. Needless to say the Central Banks and others who have participated in this SCAM must look at other alternatives when it comes to returning the gold. Will it work, who knows!!

Ray

-- Ray (ray@totacc.com), June 18, 1999.

Another rumor involved LTCM shorting 1000 tons, not the 300 mentioned during last fall's bailout. There is also a possibility of another entity (European?) shorting aprox 1000 tons.

There is about 1000 tons traded daily on the London exchange but it would seem that it is almost all paper, not metal. ie, there is not enough physical metal to cover these leveraged short positions. Some of these Central Banks which loaned the gold from which the short positions were originally created must be sweating blood these days, especially with the pog hovering just a few pennies above mine production cost. The mines must be concerned too, given that they are the ones to whom the gold was "leased" to.

Doesn't seem to me that these managers thought this scheme through. For short positions to continue to be valuable for the players there must over the course of days, weeks, and months be a slow downward trend in the pog. However at some point the pog will be low enough for players not usually in the gold trade to jump in and begin buying physical metal, which ultimately will push the pog up, ruining the inverse pyramid of shorted gold paper..... and those entities who are playing the short game. Can you say Morgan Stanley, LTCM, Citibank, USB, BOE, etc.? Remember who the LTCM bailout consortium consisted of? Wanna bet they are involved up to the crown of their head in short gold paper? They might be able to deal with y2k, but I'm wondering about these short positions, especially since y2k seems to be placing unplanned for stress upon the demand for physical metal.

-- Mitchell Barnes (spanda@inreach.com), June 18, 1999.

"i read'somewhere' the day will come when' a-bag-of-gold'for a loaf-of-bread. "

And I'll have bread to sell.

-- Mike T. (anita_martini@hotmail.com), June 18, 1999.

Andy- I read this the other day and believe it to be spot on. But ya know, they didn't manage to fool all of us. Also those in the know may hedge their bets, but might not have the foresight to get some beans. We may yet see them on their knees. I hope so.

-- Gia (Laureltree7@hotmail.com), June 18, 1999.

My pockets are not cavernous, but they're not shallow either. I have purchased gold and beans.

-- nothere nothere (notherethere@hotmail.com), June 18, 1999.

time to buy some more gold methinks, oh yes!!!

-- Andy (2000EOD@prodigy.net), June 18, 1999.