Al-Hayat, London - "A Gold Cartel Aims at Destroying the Economies of Developing Countries."

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There is a storm in the money markets caused by the distribution of a report prepared by Mr. John Embry, a senior analyst with the Royal Bank of Canada, the largest bank in Canada. The storm, which spread rapidly, south to the US, and as far as China, stemmed from the fact that Mr. Embry, in his report, supported the basic assumptions that have been promoted by a group known as GATA, short for Gold Anti-Trust Action Committee. In essence, GATA has been promoting the notion that there exists an international conspiracy to suppress the price of gold through dumping it in large quantities on world markets, and that this conspiracy is managed by a number of central and commercial banks.

Money in Court: Paving the Road to Ruin - Reg Howe

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[Note: Presentation on Thursday, May 23, 2002, to a seminar at the Grocers Hall, London, organized by the Association of Mining Analysts and sponsored by Durban Roodepoort Deep on Prospects for Gold - A new era or more toil ahead?]

As indicated on the program, your chairman, Michael Coulson, has asked me to address: "The gold anti-trust action - the Boston court judgement and the road ahead." While I will speak to the assigned topic, my own title for this talk is Money in Court: Paving the Road to Ruin, and I will speak from the perspective of the American Constitution.

An Examination of Evidence Indicating Exchange Stabilization and Federal Reserve Gold Market Activity - Andrew Hepburn

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The Gold Anti-Trust Action Committee (GATA) believes that the Exchange Stabilization Fund, under the authority of the President and Treasury Secretary has been used to surreptitiously manipulate the price of gold. The following report is an examination of pertinent evidence against the ESF, as well as information implicating the Federal Reserve in a scheme to artificially depress bullion prices. Accounting regulations devised by the International Monetary Fund are also scrutinized. The report draws mainly from government documents, previous GATA commentaries and other publicly available material. The only reasonable conclusion is that U.S. government denials of gold market activity are false.

GATA Urges Congressional Support for Monetary Reform and Accountability Act on Gold

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DALLAS--(BUSINESS WIRE)--July 8, 2002--The Gold Anti-Trust Action Committee (GATA) urges House Representatives on the Financial Services Committee to join Congressmen Ron Paul (R-Texas) and John Larson (D-Conn.) as co-sponsors of the Monetary Reform and Accountability Act (H.R. 3732).

The bill simply requires the president and Treasury secretary to get the approval of Congress before intervening in the gold market.

South China Morning Post Features RBC Report, GATA's Work.

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Missive Adds Weight to Gold Conspiracy Theory

South China Morning Post, June 25, 2002

The gold bugs got a boost at the weekend. An investment letter by John Embry, a money manager with the Royal Bank of Canada, appeared to back the central argument of conspiracy theorists who for more than three years have been crowing about the co-ordinated attempt to keep the yellow metal low.

According to the theory, the United States Federal Reserve, the Bank of England, a consortium of Wall Street banks headed by JP Morgan and Goldman Sachs, and others ganged together in the mid-1990s to keep the price of gold at less than US$290 an ounce.

RBC Global Investment Management Inc., Royal Bank of Canada's Investment House, Endorses GATA's Case.

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Clearly, with gold stocks on a tear as the gold price moves laboriously forward battling the fervent attempts to suppress it, one must be comfortable with the notion that the gold price is going to overcome the forces that are aligned against it. What is happening today is no different than what was happening in the late '60s and the very early '70s, when the Gold Pool was in existence and the gold price was contained at $35 per oz. by a consortium of central banks that dumped a considerable amount of gold to keep prices down. Today, instead of the overt action of yesteryear, it is covert because the market is allegedly free, and it has entailed a different mechanism, which has resulted in a humongous physical short position. In addition, there has been an enormous amount of derivatives piled on top, which could make the ultimate upside explosion all the more spectacular.

Bugged byGold: A Simmering Debate on the Economics of Gold Has Taken a Turn

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By Jane Bussey, Miami Herald, June 9, 2002

As Gold Fields Ltd. moved up in the world last month -- debuting on the Big Board -- the South African mining company tapped anti-apartheid crusader Nelson Mandela to help ring in what they hope is a new era in the world of gold.

Once the source of the riches of kings, in recent years gold had ceded its spot as a
financial hedge in troubled times to the mighty dollar and bubbling Nasdaq. Those

Gold Derivatives, Gold Lending, Official Management Of The Gold Price And The Current State of the Gold Market by Frank Veneroso

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Fifth International Gold Symposium

Lima, Peru

May 17th, 2002

Part 1

Gold Lending And Official Management Of The Gold Price

Let's begin with an explanation of gold banking and gold derivatives.

It is a simple, simple idea. Central banks have bars of gold in a vault. It's their own vault, it's the Bank of England's vault, it's the New York Fed's vault. It costs them money for insurance - it costs them money for storage--- and gold doesn't pay any interest. They earn interest on their bills of sovereigns, like US Treasury Bills. They would like to have a return as well on their barren gold, so they take the bars out of the vault and they lend them to a bullion bank. Now the bullion bank owes the central bank gold---physical gold---and pays interest on this loan of perhaps 1%. What do these bullion bankers do with this gold? Does it sit in their vault and cost them storage and insurance? No, they are not going to pay 1% for a gold loan from a central bank and then have a negative spread of 2% because of additional insurance and storage costs on their physical gold. They are intermediaries---they are in the business of making money on financial intermediation. So they take the physical gold and they sell it spot and get cash for it. They put that cash on deposit or purchase a Treasury Bill. Now they have a financial asset---not a real asset---on the asset side of their balance sheet that pays them interest---6% against that 1% interest cost on the gold loan to the central bank. What happened to that physical gold? Well, that physical gold was Central Bank bars and it went to a refinery and that refinery refined it, upgraded it, and poured it into different kinds of bars like kilo bars that go to jewelry factories who then make jewelry out of it. That jewelry gets sold to individuals. That's where those physical bars have wound up---adorning the women of the world.

New York Post - "Silence May Not Be Golden at J.P.Morgan Chase"

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New York Post

by John Crudele

NOT too many people would recognize the name Dinsa Mehta, at least not outside the rarefied world of J.P. Morgan Chase's executive suite. But it was a rumor about Mehta's employment status at the bank that had the world gold market buzzing last week.

For the record, Mehta is still working for J.P. Morgan Chase, where he's been for 26 years. But he is thinking of leaving after a major shake-up reduced his responsibilities as head of global commodity risk management and global foreign exchange.

The 30 Billion Dollar Not Sure Thing - HD Schultz & JE Sinclair

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We herewith discuss, via the kindness of Bill Murphy (www.lemetropolecafe.com) and in HSL (www.hsletter.com), the unique and weak character of the vehicles used for hedging by the majority of gold producers of 100,000 ounces per annum and up. To review for our new readers, those instruments are briefly:

  1. Unregulated.
  2. Traded in private treaty negotiations.
  3. Price determined not by market forces but rather by computer simulation.
  4. Short gold spreads mainly in one form of another.
  5. Far dated.
  6. Non transparent
  7. Without a clearing house function in order to guarantee the financial integrity of the instrument.
  8. Traded with in most cases between the gold producer and their gold bank which is usually a non guaranteed as to trade debt subsidiary of a major investment bank or commercial bank holding company.
  9. The Gold Banks do not as a rule publish the total nominal value of derivatives issued to all clients to which the bank is guarantor. Therefore there is no way to know the real financial integrity of even a rich gold bank.
  10. We know of no gold producer. hedger that has a right of offset in their client contracts with their gold bank. This is a critical point that is discussed in the body of this article.

We could write tomes on the technical nature of the construction of these instruments speaking to counter party risk among other weaknesses but that is not the purpose of this communication. Let us say that the brief review above of stand out points suffices to bring you into our conclusions.

We and our friends at GATA believe strongly in free markets. That is a gold market free of all manipulators both quasi-legal and illegal. We believe that a free market is not participated in by governments using extraordinary powers. We feel that governments must comply tightly with industry created referees rules that insure level playing fields for all interests. That being said we cannot oppose the practice of hedging by any commodity producer for whatever purpose that free agent has in the mind. The market, being a great leveler of interests, will work out the merits and the punishments of each entity's decision

Yet we have a great concern for gold itself. There is no question that a 30 billion dollar participation in hedging instruments by the gold producer can only result in a significant if not history making melt down of the hedging vehicles.

Should this melt down occur few participants in the industry will avoid the consequences which are: