GATA momentum builds with Toronto, Stockscape stories


11a EDT Friday, December 15, 2000

Dear Friend of GATA and Gold:

Here's a story from the front page of today's
Toronto Globe and Mail, Canada's leading

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

* * *


By Peter Kennedy
Toronto Globe and Mail
December 15, 2000

Vancouver -- As the price of gold has slumped over
the past couple of years, a theory has developed in
some quarters that powerful forces are working to
hold it down. Now the allegation has become the
basis of a U.S. lawsuit.

A Texas group that says it has received financial
backing from major gold producers has accused top
Wall Street investment firms of conspiring with the
U.S. Federal Reserve Board, among others, to depress
the price of gold.

In a complaint filed last week in the U.S. District
Court of Boston, Mass., the Gold Anti-Trust Action
Committee (GATA) is seeking compensation for an
alleged price-fixing scheme it says involves J.P.
Morgan & Co. Inc., Chase Manhattan Corp., Citigroup
Inc., Goldman Sachs Group Inc., and Deutsche Bank

GATA, whose contributors have included Canada's
Placer Dome Inc., is alleging that the five Wall
Street firms conspired with the U.S. Federal Reserve
Board, the Federal Reserve Bank of New York and the
U.S. Treasury Department and the Bank of
International Settlements to depress the price of
gold between 1994 and 2000.

By doing so, GATA says they have prevented huge
losses by financial organizations that borrow gold
from central banks at low interest rates to resell
on the open market.

Banks that borrow gold lose money when prices rise
because they must buy more gold to repay the loans
at prices higher than what they got on the open

Because of that, the complaint alleges, "over the
past two years, Goldman, Chase and Deutsche Bank
have regularly appeared as heavy sellers of gold on
the New York Commodities Exchange whenever necessary
to kill any significant rally."

While the alleged scheme is said to have generated
billions of dollars in profits for banks, the
resulting downward pressure on gold prices has
forced mines to close and pushed gold producers like
Ashanti Goldfields Ltd. to the brink of bankruptcy,
the suit alleges.

"We think this will turn out to be one of the
biggest financial scandals in U.S. history," GATA
chairman Bill Murphy said.

During an interview from Dallas, Mr. Murphy
described himself as a 54-year-old financial
newsletter writer who has decided to "do something
about" what he sees as manipulation of the gold
market, rather than just write about it.

A GATA statement of claim names U.S. Federal Reserve
chairman Alan Greenspan and Federal Reserve Bank of
New York president William McDonough.

According to the claim, the alleged scheme's
objectives included preventing the gold price from
signalling a warning of future U.S. inflation, which
would have affected the international standing of
the U.S. dollar and called further attention to the
huge and unprecedented U.S. trade deficits.

That in turn would have embarrassed the U.S.
government, the lawsuit alleges.

"Mining companies, their employees and shareholders,
and developing countries have been ruined by the
manipulation of the gold market, and it has prompted
ordinary investors around the world to put their
savings at greater risk than they would have done
otherwise," Mr. Murphy said.

He said GATA has taken legal action after receiving
$285,000 (U.S.) in donations from some of the
world's largest mining firms, including Placer Dome,
Anglo American Gold Investment Co. Ltd. (Amgold) of
South Africa, Gold Fields of South Africa Ltd. and
JCI Gold Inc.

Placer Dome spokeswoman Brenda Radies confirmed that
the gold miner provided GATA with a $10,000 donation
last year, prior to the resignation in February of
its former chief executive officer John Willson.

However, she said the company is not playing an
active role in the affairs of GATA or its lawsuit.
"We are neutral on the whole thing," she said.

"I don't know what Mr. Willson's thinking was when
he gave them the money."

A spokeswoman for Goldman Sachs declined to comment
on the price-fixing allegations which gold industry
analysts and officials say are not new.

"This has been kicking around for a couple of years
now," said Roman Shklanka, a Vancouver gold-mining
consultant and former chairman of Sutton Resources
Ltd., which was swallowed two years ago by Toronto-
based Barrick Gold Corp.

Martin Murenbeeld, a Victoria-based gold analyst who
publishes the Gold Monitor newsletter, said some of
his clients believe in the conspiracy theory. "But I
personally don't think there is much to it," he
said. "The data available today and my own analysis
[of gold pricing trends] suggests there is no

Meanwhile, Reginald Howe, a former Boston lawyer and
gold analyst who is acting as a consultant to GATA,
said the lawsuit has been timed to coincide with a
recent offer from the Bank for International
Settlements to buy out private investors who own 13
per cent of the Switzerland-based organization.

BIS, whose principal owners are the central banks of
major industrial nations, is set to hold a meeting
on Jan. 8 at which its board will vote on a proposal
to offer the private shareholders about $9,280
(U.S.) a share.

GATA is fighting the proposal in the belief that the
offer represents a substantial discount to the net
asset value of $19,099 a share. It also wants to
stop the BIS from shutting out private investors who
have bought its shares as an indirect way of playing
the gold market.

Meanwhile, Mr. Murphy said GATA is seeking a number
of remedies, including a court order that would
prevent the five investment firms named in the suit
from manipulating or trying to manipulate gold
prices on COMEX, the most important market for
trading gold in paper forms, or elsewhere.

The committee also plans to seek a court order that
would force Mr. Greenspan and Mr. McDonough to
resign as directors of BIS.

Officials of the Federal Reserve Board have no
authority to hold directorships of the BIS, the
lawsuit alleges.