Harmony Gold and African Rainbow Minerals to merge

Section:

2a ET Friday, May 2, 2003

Dear Friend of GATA and Gold:

Your correspondent's attendance at the spring meeting
of the Committee for Monetary Research and Education
in New York Thursday night was fun but could have been
more successful.

The event's big interest to GATA was the appearance
of H. David Willey, a former official of the Federal
Reserve Bank of New York, lately an independent
consultant for central banks and the International
Monetary Fund.

Willey presented a review of central bank gold
reserves in recent decades and remarked pointedly
that he saw no evidence of any official conspiracy
to suppress the gold price.

So at question time I asked Willey whether, in
dismissing suspicion of surreptitious central bank
action o suppress the gold price, he was aware of
and thus was also dismissing the following as
evidence:

1) Former Treasury Secretary Lawrence Summers'
academic study of "Gibson's Paradox and the
Gold Standard."

2) The International Monetary Fund's instructions
to member central banks that they should continue to
list as gold in the vault the gold that actually has
left the vault through leasing.

3) The studies by Reg Howe, Frank Veneroso, and James
Turk concluding that central bank gold leasing totals
approximately 15,000 tonnes, or three times more than
the amount estimated by the mining industry's standard
reference, Gold Fields Mineral Service.

4) Fed Chairman Alan Greenspan's testimony to the
Senate Agriculture Committee in 1998 that "central
banks stand ready to lend gold in increasing
quantities should the price rise."

And that is where the moderator cut me off.

Willey replied that he was indeed aware of those things,
that he thought that the "models" used to estimate central
bank gold loans were arguable, and that there was no
documentation of central bank intervention against gold.

Trying to continue with my list of evidence of central bank
intervention against gold, I said such documention included:

5) The minutes of the Federal Open Market Committee
meeting of January 1995, which quote Fed counsel Virgil
Mattingly as asserting that the U.S. Exchange Stabilization
Fund has been engaging in "gold swaps."

6) The motion recently filed in federal court in New Orleans
by Barrick Gold in reply to the lawsuit brought by Blanchard
& Co., in which Barrick asserts that its sales of borrowed
gold have made the company the agent of central banks and
thus immune to suit.

I was about to ask, as well, if Willey could explain exactly
how the United States implements its vaunted "strong dollar"
policy if, as the U.S. government claims, it does not
intervene in the currency and gold markets.

But again the moderator cut me off even as he did not permit
Willey to answer either. Instead the moderator invited me to
raise these issues with Willey privately after the formal
presentations.

I decided against doing so, figuring that it would be a waste
of time and that, indeed, I had probably wasted everyone's
time by failing to ask a question of greater relevance:
Could Willey or anyone else direct me to an official of the
Federal Reserve or Treasury Department who might submit
candidly to an inquiry about U.S. policy toward gold? GATA
has been looking for such an official since its founding in
1999.

Perhaps the second most interesting speaker on Thursday
night's program was Lawrence Kudlow, CEO of Kudlow & Co.
in New York and co-host of the CNBC television program
"Kudlow and Cramer." Kudlow's solution to the United
States' economic difficulties was that the Federal
Reserve should print and distribute as many dollars as
necessary until the gold price nears $400 and businesses
regain some pricing power.

Kudlow went on to applaud the recent U.S. war against
Iraq and predicted that the United States also might
have to go to war soon against other countries that
support terrorism ... including (I may be a gold nut but
I'm not making this up) countries in Central America
and Venezuela. (Bananas of mass destruction? Where
is Woody Allen when you need him?)

As I began to feel almost thankful for having long ago
surpassed the age of eligibility for the draft, my friend
and table mate, Nick Ferris, CEO of J-Pacific Gold in
Vancouver, offered me political asylum in Canada.

Vancouver IS lovely, but if Venezuela is next, can
Canada be far behind?

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

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