Interest rates: The golden connection

Section:

12:33a EST Saturday, December 25, 1999

Dear Friend of GATA and Gold:

Our good friend Arthur Hailey of novel-writing fame has
gotten himself and GATA into the National Post's
Financial Post section in his native Canada, striking
another blow for the gold cause. The story follows.
Please post it as seems useful.

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

* * *

Arthur Hailey takes aim at Barrick,
accuses miner of suppressing the gold price

By Keith Damsell
Financial Post (National Post, Canada)
December 24, 1999

In a storyline worthy of one of his own novels, writer
Arthur Hailey is alleging that Barrick Gold Corp. is
part of a conspiracy to keep gold prices depressed.

Mr. Hailey, author of a long list of best-sellers
including "Hotel" and "Airport," claims the Toronto
gold giant's aggressive hedging program has aided the
precious metal's decline.

"I was and am critical of Barrick," said the 79-year-
old writer in an interview from his home in the
Bahamas. He recently dumped his 4,600 shares in the
company. "Without a doubt there's been a great deal of
misuse of gold that's holding the price down," he said.

Barrick contends that its plan is trouble-free. About
12.5-million ounces of gold, about three years of
production, have been sold forward at $385. The company
can defer forward contracts for up to 15 years.

"From our point of view, (hedging) doesn't affect the
gold market at all," said Vince Borg, a Barrick
spokesman. A spokesman also told Business Week
magazine that gold bugs like Mr. Hailey "tend to believe
there's a conspiracy under every piece of ore moved."

In an October letter-writing campaign, Mr. Hailey and
dozens of members of the Gold Anti-Trust Action
Committee urged Barrick and other gold majors to end
their forward-selling programs. GATA, a Dallas-based
lobby group, alleges that a worldwide conspiracy has
controlled the price and supply of gold and gold-linked
securities.

Barrick's hedging program is the envy of the industry.
Its "premium gold sales program" has generated more
than $1-billion (all figures in U.S. dollars) in additional
revenue over the past 11 years.

To protect themselves against declines in gold prices,
Barrick and other producers borrow gold from central
banks at low interest rates, then use the money to
acquire better-performing bonds. In theory, the
"contango," the spread between bond yields and the
leasing price of gold, provides a risk-free growth
strategy.

The problem is that some producers were caught off
guard when gold unexpectedly surged to $339 an ounce
in October.

The jump has left Ghana's Ashanti Goldfields Co. Ltd.
and Cambior Inc. of Montreal struggling to cover
millions in creditor claims.

Gold has since slumped to the $285 level. Nevertheless,
many hedgers and short-sellers remain "in a bind," said
Mr. Hailey. "The price going up has made life very
difficult," he said.

The assurances have failed to convince Mr. Hailey,
whose 1997 urban thriller "Detective" sold millions.

So will he be turning his writing talents to the murky
gold trade?

"The answer is no. I'm sure there's a story there, but
I won't be the one to write it."