I have been on a sabbatical for many months NOW - trying to puzzle out a riddle wrapped in a mystery inside an enigma: the London Bullion Marketing Association (LBMA).

I need your aid to help me clarify something that has been bugging me for almost a year: What was the real reason behind LBMA's PUBLIC DEBUT early last year? Consider for a moment the monumental significance of this august body.

Although the LBMA has been operating for decades (if not a century or two), it was unknown to nearly all gold traders worldwide until 15 months ago. Then without one iota of fanfare, an obscure announcement was made January 30, 1997 on the Internet that a so-called LBMA trades 30 million ounces of bullion daily in old London town. This is mind boggling. To be sure recent months the DAILY gold trading volume has grown apace (40,000,000 troy ounces) to now equal more than 50% OF THE ANNUAL WORLD'S MINING PRODUCTION. Subsequently, there began regular monthly announcements of the increasing LBMA daily turn-over of the yellow metal. Each marketing report is made with the same boring and seemingly uneventful tone as, "the DOW is up again this morning - so what else is new?" Something is going on!

Following are some startling comparisons which highlight the draconian magnitude of LBMA's gold trading.

• LBMA is trading more than 1,200 tonnes DAILY
  
• LBMA is trading more than 300,000 tonnes ANNUALLY
  
• DAILY gold trading represents about 50% of the world's yearly mine production
  
• YEARLY trading is more than 125 times the world's annual mine production
  
• ANNUAL TRADING is nearly 9 TIMES Central Bank holdings (35,000 tonnes)
  
• LBMA DAILY gold trading value is about $12 BILLION
  
• LBMA YEARLY gold trading value is about $3.0 TRILLION at current prices
  

WHY HAS THIS BEEN REVEALED TO THE PUBLIC? WHO ARE THE SELLERS? MORE IMPORTANTLY, WHO ARE THE BUYERS? AND WHY IS IT ANNOUNCED WITH SUCH REGULARITY? MAKES A BODY WONDER THAT PERHAPS SOMETHING IS AFOOT WHICH DONESN'T MEET THE EYE.

While all this is circling in the windmills of my mind, the Internet bombards me daily with talk of the emerging Euro… and the vital and tantalizing question of what percent gold backing the new currency will sport. THEN SUDDENLY LIKE A BOLT OUT OF THE BLUE I AM STRUCK WITH A MESMERIZING THOUGHT. My question to you is whether my hypothesis is feasible, or just one of those random exaggerated ideas that occasionally pop into one's head. Here it is.

It is a statistic that worldwide currency trading amounts to MORE THAN $1.2 TRILLION DAILY. I have no way of knowing, but I would make a EXAGGERATED guess that perhaps 20%-25% may be attributed to European currency trading among the countries of that continent - in addition to those currencies cross-trading with the U.S. Dollar and Japanese Yen, and to a much lesser extent a myriad of other foreign currencies. But for the sake of argument, let's be conservative and say European currencies account for only 20% of the $1.2 TRILLION DAILY GLOBAL CURRENCY TRADING. Obviously, that is $240 BILLION.

In comes the Euro on New Year's Eve 1999. No more European currency trading for the 11 EMU members. What does the DAILY speculative $240 BILLION DO?? Do they remain idle? Or will there be another very liquid and well-know market available for this impetuous money - which will not remain idle for long? It will indeed find another vehicle for its speculations… AND WHAT HAVE WITH HERE?! The LBMA!

True, the daily trading LBMA volume of the 40,000,000 ounces is only valued at $12 billion, but that's at a gold price of only $300 per ounce. Nonetheless, the LBMA is NOW well publicized and demonstrates good liquidity. It has been methodically doing its PR marketing for over a year now. What better trading conditions could hot, speculative international money desire?! After all, gold has been considered by the world since time immemorial as a currency par excellence. Former President of France, General Charles de Gaulle expressed it well:

Is my thought too far-fetched…perhaps just a romantic figment of my vivid imagination? OR does it have some semblance of logic in explaining the until now riddle wrapped in a mystery inside an enigma of WHY THE LBMA ANNOUNCED ITS EXISTANCE, AND BROADCASTS ITS MONTHLY TRADING TO THE WORLD? Will the heretofore European currency trading monies seek action at the LBMA? Remember, we are talking a conservative $240 BILLION DAILY LOOKING FOR SPECUALTIVE TRADING, once the Euro emerges.

Already the LBMA projects financial confidence, organizational structure and trading liquidity of a known currency - vital attributes and conditions sought by institutional traders. What else could international institutions ask for? Moreover, its notoriety has painstakingly - but ever so discreetly - been forged during the last 12 months via the promotional "infomercials" of announcing gold trading volumes every few weeks.

Have we ALL been the unwitting targets of a very carefully and long-planned marketing campaign of LBMA?! Methinks YES.

If true, what's the probable UPSHOT? The current LBMA daily gold trading volume is approximately $12 Billion - with the yellow languishing about the $300 level for some time. Debut the Euro… nearly all European currency trading dries up. And voilà, there is a daily shift of up to $240 Billion of eager trading monies to the LBMA looking for currency action. Consequently, gold demand explodes, along with its price.

It is indeed feasible… quite possible… and most probable… as idle cash does not stay so for very long. What do you think?