Gold Page 13

  “Drew’s worried about the stringer who reported the news,” Corrello said. He knew the best way to get through to Madison was just to keep on a straight tack to his objective.

  Madison snorted. “Is he dead too?”

  “We’ve never been able to reestablish contact with him.”

  “I wish to hell we never had in the first place,” Madison said with feeling. “So we had a scoop. If the story’s fake, we’ll lose more business than we gained.” He thought for a minute. “If this thing blows up in our faces, I’ll have Drew’s ass.”

  Madison did not have to say to Corrello who else’s ass was on the line.

  “If Drew did go to South Africa, he could get some verification of the sabotage and find that stringer,” Corrello suggested, after what he deemed an appropriate pause to let Madison know he had gotten the message.

  “What are Dow Jones and Reuters doing? Don’t they have stringers in South Africa?”

  “They’re much more prominent; their people were kicked out first,” Corrello said. He didn’t add that the other two agencies had been paying staffers in South Africa, not relying on a stringer for one of the most important commodities markets in the southern hemisphere.

  “What if Drew finds this stringer? Then what?” Madison asked. He was weakening.

  “Well, I suppose he’ll find out his source. Confirm the accuracy of the report.” Corrello smiled. “Knowing Drew, he’ll dig up a scoop or two of his own while he’s there.”

  Madison frowned. Corrello understood his dilemma. The last thing in the world Madison wanted was further complications from another scoop. On the other hand, the agency’s sales manager couldn’t stop talking about how the sabotage beat had lifted subscriber sales.

  “What kind of scoop?”

  “If he gets a visa at all—and he thinks, the situation being what it is, he might—he’d be one of the few journalists allowed in since the state of siege was declared,” Corrello said. A former reporter, he was on Drew’s side, uneasy himself about the gold selling in the market.

  “What are we going to do about this corpse?”

  Corrello was used to Madison’s shifts. “Nothing just yet. The British papers will tumble to it first, because Scotland Yard was involved. We’ll wait and see if the American papers pick it up. Anyway, it’ll seem a small footnote.”

  “Let’s keep it that way,” Madison declared. “Tell Drew to go on to South Africa but not to do another goddamn thing on the story without clearing it with us.”

  NINE

  Drew’s Swissair flight arrived punctually; within fifteen minutes he was comfortably installed in Kraml’s BMW. It had been only two hours since he telephoned Corrello from Roissy airport in Paris.

  “Nothing like Swiss efficiency,” Drew said to the trader, as the two of them sped along the Autobahn through the flat farmland surrounding Kloten, the Swiss village that gave its name to Zurich’s airport.

  Kraml grunted. “The Swiss are boring,” he said with an Austrian’s automatic disdain for efficiency. But the young dealer was clearly nervous. Drew had noticed this the moment they met when he emerged from the gate.

  Kraml ignored the exits for Zurich. Drew was to spend the night at Kraml’s home south of Zug.

  “You’ve put on weight, Hannes,” Drew said, to make conversation.

  “Family life,” said Hannes, making a joke.

  “How is your wife?” Drew continued the formalities.

  “She likes it here. She’s Swiss, you know.”

  The banalities only seemed to increase the tension. The two men continued in silence.

  “I’m worried,” Kraml finally said. “I think Marcus is working some kind of fiddle, but I can’t figure out what it is.”

  “What’s going on?”

  “Well, Marcus and Blacky seem to be controlling the gold price. They’re playing the market, but always in control.”

  “How do they do it?”

  “That’s what I can’t figure out. Either they have some gold stashed away somewhere or they’re pretending they do.”

  “What’s the feeling in the market?”

  “Always nervous, very nervous,” Kraml paused. “Then today, Marcus got even funnier. He started shorting gold in the futures market.”

  Officially, Kraml did not even know this, but he had uncovered the transactions during the afternoon.

  “There’s something else strange,” Kraml continued. “He’s not the only one. Another Swiss group seems to be shorting gold. No telling who they’re trading for.”

  “What do you think is behind it?”

  Kraml shrugged. “I don’t know.”

  “Could Marcus have built up a position in gold?”

  “It’s too big. Not even Marcus could afford to stockpile that much gold.”

  “Somebody else?”

  “No, no. It’s too much.” Kraml showed his frustration. “The only ones who could have that much gold are the producers.”

  Drew thought for a while. “Do you think it’s possible that South Africa is the source of the gold?”

  “But their mines have been bombed.”

  “What if they had stockpiled some gold?”

  “Impossible. Everyone knows the South Africans were selling every ounce of their production when the attacks took place.”

  “What about the Russians?”

  “They’re selling, all right,” Kraml said. “And our visitor the other day points to Marcus as their dealer.”

  “Could they be the source of the gold?”

  “Dammit, Drew, you know better than that. Everybody knows both the Soviet Union and South Africa desperately need hard currency, so they were producing to the maximum and selling everything they produced. And then the South African mines got bombed. So there should be a lot less gold on the market, unless some goddamn trader has developed a Midas touch.” Kraml took the exit for his lake road.

  “You know how the markets work,” Drew said. “We don’t really know how much gold the Russians can produce, or how much they’re selling. We make guesses. Then we see if the transactions in the market are in line with those guesses. It’s like physicists with the laws of nature. They make hypotheses and then test them empirically. For a long time, a hypothesis can look like it’s right, and then something happens that proves it to be wrong. So you come up with a new hypothesis.”

  “What’s your hypothesis?”

  “I’m not sure yet,” Drew hesitated. “Granted, it would be very hard to accept that South Africa had stockpiled any production.”

  Kraml just grunted.

  “But maybe all our estimates about the Russians are wrong. Maybe they’ve made a new find we don’t know about yet. Or maybe the South African sabotage wasn’t as bad as we were led to believe,” Drew concluded. “There are any number of reasonable hypotheses.”

  “Yeah, real reasonable, if you know about them.” Kraml wasn’t satisfied. “I think Marcus does know. I think he may be the only one who does.”

  “And I think you’re right about that,” Drew said. “Look, can you poke around some more?” He saw the Austrian grow even more tense. “Don’t get yourself into trouble, though.” For some reason, he had a flash of that corpse in Annecy.

  “I’ll be careful,” Kraml said.

  “I’m going to try to go to South Africa and see what I can find out,” Drew said. “I haven’t talked to our stringer since he sent us the telex about the sabotage.” The telex he had never seen, Drew thought guiltily.

  Kraml turned into a well-manicured drive, leading to a two-story house. Drew realized suddenly he was looking forward to a relaxed evening and hoped that the presence of Hannes’s wife would steer the conversation away from the gold market. The thought of Carol flashed quickly through his mind.

  ~

  “I don’t like it,” Carol said, as they sat together in the Cock and Bull. “Central bankers have no more to do with murder than journalists do.”

  Drew had just finished tellin
g Carol about his trip to Annecy, his visit to the morgue, and the Renault in Paris.

  “I think we should just report all this to Halden and Guinness and let them pass it on to the proper government authorities,” she said.

  “Pass on what? MacLean got involved with some thugs who swindled the market. Financial markets are jittery because there’s more gold than there’s supposed to be, and I was daydreaming when I crossed a street in Paris. What’s the CIA going to make of all that?”

  Drew was exasperated. He knew Carol was right, but he knew as well that their instinct for what was happening would be difficult to convey to those not familiar with financial markets.

  “There’s something more,” Drew continued. “I feel very much personally involved in all this. It was my colleague—my subordinate—who swindled the market and got himself killed in the process. It was my story—my decision—that closed financial markets around the world.”

  He paused; Carol waited patiently.

  “If the story was wrong, if the South Africans are somehow still supplying gold to the market, do you realize how that would make me feel?”

  “It’s not your fault, Drew. No more than the debt crisis is the Fed’s fault. You were doing your job.”

  “My job is to report what’s going on. I’m trained to sift out truth from lies, but this time I may have made a mistake and passed on a whopper.”

  “You had every reason to accept the report. Agencies bigger than yours, journalists older than you, accepted the declaration of the South African government.”

  “But my report made it possible for them to accept it. It tipped the balance in making Pretoria’s announcement credible.”

  Drew punctuated this last statement by pounding his fist onto the table.

  “I can’t just sit and wait for things to happen,” he continued. “Marcus is playing a key role, so I’ve got Hannes digging into his operation. And if I can get to Van der Merwe—”

  “Has it occurred to you that Van der Merwe might be dead too?”

  Drew looked at Carol. The whole conversation seemed ludicrous. Carol’s features were alluring in the semidarkness of the pub, and he wished he could devote himself to her. She was right, though, Drew realized for the first time. After everything that had happened, he had to face the possibility that his stringer had met a fate similar to MacLean’s.

  “Did you know Martinez shot himself?” Carol said.

  “The Mexican finance minister?” Drew was genuinely shocked. “The wires said he died of a heart attack in his office.”

  “They’re trying to hush it up. Halden called me on Monday.”

  “Is the situation in Latin America so critical?”

  “The Mexican president is threatening repudiation. The gold crisis has dried up liquidity so much that all the makeshift solutions to the debt crisis don’t work anymore.”

  Drew was silent as he tried to work out all the connections. Carol took his hand.

  “There’s a meeting in Rio at the end of the week,” she said softly. “I’m meeting Halden there.”

  The next couple of days were very full. Drew rode herd on the nervous markets. The gold situation and the declarations of the Mexican president—as well as the suspicious death of the finance minister—brought the markets to a near standstill, interspersed with bouts of frantic trading.

  As Drew anticipated, the South Africans granted him a visa quickly. They could not risk arousing any suspicions regarding their own truthfulness.

  Carol meanwhile interviewed executives and traders and the major British clearers and merchant banks. She worked late into the evenings writing her report, calling Halden with a brief summary each day.

  Wednesday and Thursday passed quickly. Carol’s flight for Rio was at ten o’clock Friday morning; Drew was to leave for Johannesburg on Saturday. They had no time for each other.

  TEN

  The girl was stunning—tall, her tawny skin darkened further by the sun, the silky brown hair flowing down her back, stopping just above her shorts, which two elegantly molded legs kept swinging suggestively back and forth.

  “It seems such a waste,” Halden said, watching the girl’s progress in front of them. “To come all the way down here, spend two days in a hotel, and then just leave.”

  Carol murmured something that Halden construed as agreement. She had been withdrawn since her arrival from London. Her report on the gold market had been extraordinary, even by the high standards she set. It had all the usual detail and thoroughness, but also an unusual amount of feeling, of involvement in the subject. She looked tired, though.

  “Be nice to take some time off—spend a day on the beach, night on the town,” Halden continued as they reached the end of the airport concourse and their gate. He had done neither in years.

  The Brazilian girl had disappeared as they checked in on the Varig flight to New York. Most of the passengers were already on the plane, so the two boarded immediately in the first class section.

  “So much for what history will record as the Rio Conference.” Halden grunted as the plane banked, giving them a glimpse of the harbor made famous by countless movies and posters.

  “It was a tough one,” Carol said.

  “Tough is hardly the word; I think it means the end,” Halden said, becoming pensive.

  Mexico’s ultimatum had inspired new courage in the Latin American countries. They had jointly declared suspension of all debt payments and threatened to repudiate all sovereign debt. All the countries attending—Brazil, Mexico, Argentina, Peru, Venezuela, Chile, even forlorn little Bolivia—signed the final communiqué declaring war on Yankee capitalism. The prolonged agony of the debt crisis had unified the Latin American countries for the first time since they won independence. If the Latin Americans followed through on their declared intentions, Western banks faced staggering write-offs of hundreds of billions of dollars.

  “The initial impact of the declaration will be in the interbank lines,” Carol ventured in the silence.

  “I’m not so sure; I hope we can keep bank lines on ice for another week or two,” Halden responded, as much to himself as to his companion. Halden’s safety net of Fed support in the interbank market had succeeded in calming the turbulence there.

  The Fed guarantee of interbank lines had given Halden enough leverage to win one concession at the conference: the Latin Americans would wait two weeks to implement any decision to repudiate the debt. Even though most of the countries had already ceased making any payments on their debt, a formal repudiation would shock the market psychologically. Halden wanted to mitigate the shock by postponing formal default as long as possible.

  “Will we go to Washington right away?” Carol asked.

  “I’ll go. Roberts and Johnson will be waiting for me. You’ll have to brief the fellows in New York.”

  Halden was worried, but he hoped to keep the situation stable for the next week or two. The Fed guarantee, comforting calls to the banks, confident statements to the press would calm the incipient panic. Fortunately, the Latin Americans had issued many ultimatums before; the U.S. Press was likely to view the latest declarations with skepticism. They would expect someone to come up with yet another face-saving agreement so the world’s money machine could keep clunking along.

  But Halden knew this declaration was different, and he was fairly sure that neither the administration nor Congress was in the mood for further concessions.

  Even if American public opinion could be coddled along to avoid a panic and a run on the banks—no small “if” in itself— Halden was more worried about the effect of an international run of confidence on the dollar.

  “It could be awful,” he said aloud.

  Carol pretended not to hear. She continued writing up her notes from the conference.

  “Do you think there could be a run on the dollar with the announcement of the payments moratorium?” Halden asked her.

  “Isn’t the problem still the same—run from the dollar to where?” />
  “The yen, deutsche mark, Swiss franc, even the pound sterling.” Halden listed the other main international currencies.

  “Those currencies don’t have the depth; the countries would stop exchanging them.” Carol repeated the consensus view.

  “Gold?” Halden suggested softly. That was the real wild card. What was happening with gold? How much gold was there in the market? That was the big mystery. If the market knew for sure there was enough gold, there might be a massive flight of capital out of the dollar.

  “The gold supply is limited,” Carol responded. “And now production is supposed to be greatly impaired.”

  Halden looked at the economist sharply. He had noted the qualification in her statement and looked to see how significant she meant it to be. Carol’s face was impassive.

  “What you say is logical, but people aren’t always logical in a panic situation,” he said.

  “But the moratorium doesn’t change that much, in reality. The market will see through it,” Carol said.

  “Yes, but the balance is so delicate,” the Fed president said. “What would happen if there was a crash?”

  Carol faltered momentarily at the unexpected question. “A financial crash can lead to war,” she ventured.

  “It did in the 1930s,” Halden conceded. “But there were a couple of crashes in the nineteenth century that didn’t. Besides, the only dangerous war nowadays would be between the Americans and the Russians, and the Russians wouldn’t really be affected by a crash too much.”

  “But the Soviet Union might invade the Middle East or even Western Europe if the financial system collapsed,” Carol protested.

  Halden continued as though she had not spoken. He did not hear the undertone of anxiety in her voice. “Who would be in the best position—natural resources, energy, industrial base, internal market?” Halden’s question this time was rhetorical. “We’d certainly be better off than Japan or Europe.”