gata's take on the fall in pog

10:58p ET Thursday, June 26, 2003


Dear Friend of GATA and Gold:


Sprott Asset Management's new president, John Embry,
turned up again on ROB-TV in Canada on Tuesday
night, and GATA's Mark Webber not only hung on
every word but once again produced a transcript, which
is appended. It is encouraging on account of Embry's
telling a nationwide audience that the bashing of the
gold price this week was obviously an attempt to
protect the U.S. dollar on the eve of the Federal
Reserve's cutting dollar interest rates down to almost
nothing.


Incidentally, it looks like Sprott will be helping to
manage a new gold bullion fund in Canada. You can
read about it at the link below, but the legalese
attached to it suggests that anyone reading it
outside Canada may be visited by the Royal Canadian
Mounted Police. Well, better than a visit from
Attorney General Ashcroft....


http://www.sprottassetmanagement.com/pdf/CGT.pdf


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


* * *


ROB-TV'S "NIGHTCAP" PROGRAM
with Howard Green
Tuesday, June 24, 2003


GREEN: Tomorrow is the Fed day many have been waiting
for to see if Greenspan & Co. will in fact cut rates perhaps
as much as 50 basis points. If that happens, no doubt there
will be an impact on the U.S. dollar and possibly on gold.
Joining us this evening on "Nightcap": gold expert John
Embry of Sprott Asset Management. Good to have you
back with us, John.


EMBRY: Thanks, Howard. It's always nice to be here.


GREEN: So tomorrow, if he does drop rates 50 basis points,
what do you see for the U.S. dollar and then gold?


EMBRY: I suspect he might, given the beating gold took
today. They generally soften gold up when they're going to
do something that might be gold-friendly. And it was
amazing. It came in there very quietly into New York this
morning. They just jumped it. And they took it down just
about 6 or 7 bucks immediately. And at that point I thought
to myself: Hmmm. ... Maybe it IS going to be 50 basis
points. I think that sends the wrong message because he's
trying to promote the idea that the U.S. economy is getting
better, and the second half is going to be better. If that's
in fact the case, 50 basis points looks like overkill. So
we'll wait and see. I'm waiting with baited breath.


GREEN: Often he surprises people. And if a lot of people are
saying it's going to be 50, he might come in at 25 just to save
himself an arrow there.


EMBRY: That's an interesting observation because there was
a lot of controversy over a couple of articles in the newspaper
last week. The Washington Post ran an article saying it was
going to be 50 basis points. The next day one of the New
York papers -- The Wall Street Journal, I guess -- had a
totally different slant on it. It was almost like he's
managing the news.


GREEN: Trying to confuse people maybe?


EMBRY: Absolutely, absolutely.


GREEN: Yeah, and so what would that mean for gold if it
were say 25 basis points tomorrow?


EMBRY: I don't think it makes much difference. We're in the
accumulation phase for gold. These short-term machinations
dancing around alleged news events are not that significant.
As I said before, this an actively managed commodity. I think
the reason it was soft today is they're getting ready to have
a bigger rate-cut than anticipated. We'll wait and see.


GREEN: What's going to be the catalyst for these gold
stocks to start to move again?


EMBRY: The gold stocks will move on a better gold price.
It was interesting. The gold stocks were acting quite a bit
better up until about three days ago. And I thought: Maybe
we've got something going here. But then they beat gold
up again and pushed it back into the box. But the early
stages of bull markets are difficult. Nobody believes it.
And you have these violent corrections and everybody loses
confidence. And then we start building the base again. It
gets ready to creep up. I'm not the least bit concerned. I
think the fundamentals behind gold, when you look at
what's going on in the United States, are as powerful as
they have been in 30 years.


GREEN: But there seems to be a lot of interest in a lot
of other types of stocks these days.


EMBRY: There is indeed. I mean what you've got is the
entire U.S. system floating on a absolute sea of liquidity.
Mr. Greenspan has been way over the top in the liquidity
he's providing the system. My gut reaction is: Is there
something we don't see that's bothering him, like Long
Term Capital Management? When he's talking about
deflation I look at Freddie Mac and this issue with
derivatives. Long Term Capital Management came to the
surface only five years ago. There had been a lot of work
done before it was announced. I think the Freddie Mac
thing could be much more serious than people think.
This is a big, big part of the U.S. financial structure now.
Very strange behavior when they fired the three executives.


GREEN: A lot of people talk about gold being useful in
inflationary times. What about in deflationary times?


EMBRY: History would say that anything that basically
puts financial assets at risk, and given the amount of
debt in the system, if you had deflation -- and heaven help
it if we ever do -- that would be the last thing I would ever
want to see. You would have so much financial chaos people
would run, I think, to an eternal store of value, which is
gold. Gold does poorly when you have disinflation and
financial assets do well. Financial assets will not do well
in deflation.