GATA now accepts contributions by credit card on the Internet

By BILL MURPHY, Chairman
Gold Anti-Trust Action Committee Inc.
August 19, 2001

While it is important to discuss gold price fixing problem on the
Internet, it is more important to DO something to correct it. That
means writing your U.S. representative and senators, asking them to
go to Treasury Secretary Paul O'Neill for answers to specific
questions -- such as to the meaning of the disappearing Special
Drawing Rights certificates.

Doing something means calling executives at Newmont Mining and
Homestake, asking the silent ones what they are doing to help ferret
out answers from the U.S. treasury
secretary.

Don't just sit back and wait for Reg Howe to win the day
in a discovery process in federal court. If you contribute to the
process, there will be an uproar by the time of the court
hearing, October 9. The more controversy, the more likely the judge
will find it necessary to allow the truth-seeking process to continue.

Just yesterday fellow concerned citizens sent me copies of letters to
Sen. Paul Sarbanes, chairman of the Senate Banking Committee; Sen.
Peter Fitzgerald of Illinois; Sen. Paul Wellstone of Minnesota;
Sens. Arlen Spector and Rick Santorum of Pennsyvania; Rep. Joe Pitts
of Pennsylvania; and William H. Gray III, president and CEO of the
United Negro College Fund.

If you have not already done so, please take some time to contact
your members of Congress. The process is working. GATA supporters
outside the United States can alert their country's journalists and
ask them why they have not reported on the Howe lawsuit and the GATA
discoveries. The press is being shown up by the reporting of college
kids lately, as indicated by last week's story in the Harvard
Crimson.

While I am not at liberty to identify him, a U.S. senator has
privately revealed to a GATA supporter that a gold market scandal is
brewing. So go for it. Help us and yourself.

* * *

Which brings us back to Mike Bolser's recent commentary identifying
what he called quot;GoldGate's Real Motivequot;:

We suggest that a manipulated gold price was a prerequisite for the
assumption of the $16 trillion in interest rate derivatives currently
held by JPMorgan-Chase. We draw attention to these disproportionate
derivative positions and remind readers that the associated risks
attached to these interest rate derivatives depend in part upon the
absence of gold market volatility and successful management of
inflationary expectations.

The increase in Morgan-Chase interest rate derivatives coincided
with a long period of gold price quiescence ... a prerequisite for
successful derivatives strategies. At the end of 1999 the Washington
Agreement upset that quiescence, bringing unwanted volatility to
Chase and its huge position.

Recall from Nicholas Dunbar's book quot;Inventing Money,quot; the LTCM
disaster was hastened by volatility -- indeed, volatility played the
key role. In this boutique hedge fund's case, Italian bonds, Russian
bond defaults, Caribbean counterparty defaults, and currency turmoil
triggered their demise.

It is clear that volatility and leveraged derivatives are a dangerous
mix. There is a long history linking inflationary pressures, sharply
rising interest rates, and gold price volatility. Such a climate of
interest rate volatility is incompatible with the large risks we now
see in JPMorgan's interest rate derivative position as reported by
the Office of the Comptroller of the Currency.

* * *

Speaking of the Gold Cartel and the Treasury Department, here is a
gem of note from a GATA supporter:

quot;Yesterday morning I met New York Fed President Bill McDonough. He
arrived late to our meeting, which was to a group of people from
District 2 (New York, northern New Jersey, and southeast
Connecticut). We met on the 10th floor in a conference room.
Interestingly, the economists of the New York Fed left when he
arrived. He explained that he was late was because he was on a
conference call regarding the dire situation in Argentina. He then
spoke to us about the Fed and his job.

quot;McDonough remarked that in eight years on the job, he has never
disagreed with Fed Chairman Alan Greenspan. He explained how
everything is usually arrived at by consensus. And even though,
McDonough said, Greenspan is quot;Jewish and conservative and he,
McDonough, is Irish and left of center,quot; they think alike.

quot;Now I had only time to ask only one question. So I waited to ask
after the first person. My query was the first question that Chris
suggested that I ask. McDonough took only five questions and left, so
I could not speak with him after. I took notes as he replied so that
I would not have to rely on memory and perhaps get it wrong.

quot;The question I read to him was printed off of Chris' e-mail to me:
Exactly how does the U.S. government implement its so-called strong
dollar policy in the absence of currency interventions, which, it has
been reported, have not taken place to any substantial degree for
years now? Does implementation of the strong dollar policy have
anything to do with regulating the gold price?quot;

quot;McDonough answered the second question first. He said that
implementation has nothing to do with gold, and that there is no
chance of going back to the gold standard. The decision on the strong
dollar policy was made in the second year of the Clinton presidency.
Treasury Secretary Robert Rubin proposed that only the treasury
secretary be empowered to speak about the currency. So for the past
seven years only the treasury secretary spoke about the dollar.

quot;McDonough added that some people think that there has been a change
of policy. but there has not been, and only Secretary O'Neill speaks
about the dollar. Some people think that if he does not say at every
opportunity that he favors a strong dollar, there has been a change
of policy.

quot;McDonough added that $450 billion is invested by foreigners in our
country. He said that it would be detrimental to the United States if
they failed to add to their investments, never mind retrieving their
current investments.

quot;'Nobody knows what the exchange rate should be,' McDonough said. 'We
do not intervene because it does not work. If our economy is managed
well, the U.S. dollar will do well.'quot;