Nine-page special report about GATA in New African magazine

By Bill Murphy, Chairman
Gold Anti-Trust Action Committee Inc.
Sunday, December 16, 2001

The Christmas/end-of-year holiday season is a time of
reflection for many of us. As a result of the terrorist
attacks and other strife in the world, the closing of
2001 may be more poignant than most years. It certainly
is for me, as chairman of the Gold Anti-Trust Action
Committee.

Chris Powell and I will soon commence Year 4 in our
effort to expose the manipulation of the gold price.
From Day 1 we stated that our main goal was to expose
the truth about the gold market. That is what we told
the speaker of the U.S. House of Representatives,
Dennis Hastert; the chairman of the House Subcommittee
on Domestic and International Monetary Policy, Rep.
Spencer Bachus; the House chairman of the Joint
Economic Committee, Rep. James Saxton; and the
president of the United States, George W. Bush.

Over the past four years we had discovered massive
evidence of gold market manipulation. None of that
evidence contradicts our initial assertion that gold
was not allowed to rise in price due to an orchestrated
effort of certain bullion banks. Unfortunately, we have
learned the gold price manipulation extends to the
International Monetary Fund, the Bank for International
Settlements, the Federal Reserve Bank of the United
States, and the U.S. Treasury's Exchange Stabilization
Fund.

It is not a pretty picture. We are talking about the
most powerful and wealthiest institutions in the world.
Who wants to take them on?

That is especially the case for the world's major gold
producers, which count on the bullion bankers for
financing and on the politicos for mining rights,
permits, etc.

To question these powerful institutions is to challenge
the elites of the world.

But that is just what must be done if truth is to
remain a standard to be aspired to. It saddens me to
say that GATA has found out the tedious way the truth
is often sacrificed by the establishment and mainstream
press to preserve the interests of big money. How else
can you explain the three-year U.S. news media blackout
of GATA and Reg Howe's lawsuit against the gold cartel
in federal court in Massachusetts?

Fortunately, that has not been the case in South
Africa. The GATA African Gold Summit held in Durban on
May 10, 2001, was covered by all the major South
African news organizations and covered for two days by
the South African Broadcasting Co. All the major gold
producers in South Africa have supported financially
GATA's search for the truth about gold. We are most
thankful.

One of GATA's supporters in South Africa is AngloGold,
the world's largest gold producer. Its respected CEO,
Bobby Godsell, is also the chairman of the World Gold
Council. He is unique in that he is willing to share
his thoughts, ideas, and opinions with AngloGold
shareholders over the Internet. It is most admirable
and reflects a serious truth-finding effort on his
part.

The following is recent correspondence between Godsell
and Jim Bruce, a GATA supporter and member of
www.LeMetropoleCafe.com. With all the commotion in the
gold world these days, I think you will find the
exchange illuminating. Godsell has authorized its
publication.

* * * * * * * * *

Dear Jim:

Thank you for your email. For ease of reference I offer
you a response to your five questions, under each
question, and simply to distinguish answer from
question I have put the answer in capitals. Please do
not hesitate to come back with a further response. I
know I work with less than full information, and so I
value what I have learnt from many sources, including
email.

Regards,

Bobby Godsell

* * *

Dear Mr. Godsell:

It is an honor to write you, and I thank you very much
for the time you take with this email.

I am an AngloGold shareholder (through a number of
funds) and am in my mid-60s. I own my own computer
services company in upstate South Carolina. I have been
a gold buff for many years, going back to at least the
early 1980s.

I am frustrated because I cannot help but believe that
the gold markets have to have been manipulated over the
last few years. Nor can I understand why the World Gold
Council is not standing up to that or promoting, with
gusto, gold as having primarily monetary value and
being an integral part of one's investment portfolio,
rather than push an agenda to sell jewelry.

I've read some of your commentary on the Internet and
respect your views. I have also followed GATA and its
chairman, Bill Murphy, and visited
www.LeMetropoleCafe.com many times.

While Murphy may seem eccentric at times and can get
quite angry and frustrated, thereby ticking off the
gold establishment, he and his team do throw enough
wood on the fire to make the average person lean toward
manipulation as the only logical reasoning for the
suppression of gold prices. With half of the larger
mines, the WGC, the Fed, the bullion banks, most of the
news media, and most of the central banks ignoring him
(other than to call him a loon from time to time), it
does make Murphy's accusations of a conspiracy all the
more believable as well as ominous to the average
investor.

I pray I do not insult your intelligence with my
comments or the following questions. It is just that
there is so much stuff out there and I'm just a little
fella trying to make a living and leave my family a few
bucks when I'm gone.

Some questions, if I may:

Question 1. Since no one in the gold industry has
refuted GATA's evidence, why would it not be possible
to invite Bill Murphy or Reg Howe to London to present
that evidence to the World Gold Council? It sure would
clear the air for a lot of folks like me, regardless of
who would wind up being right. If not, could you give
me a logical reason why you wouldn't invite these
folks?

SEVERAL RESPONSES:

-- REG HOWE IS IN COURT AT THE MOMENT. GOING TO COURT
HAS THE ADVANTAGE OF REQUIRING THE LITIGANT TO VERY
SPECIFICALLY FORMULATE HIS CASE, AND REQUIRES THOSE HE
ACCUSES TO VERY SPECIFCALLY FORMULATE THEIR RESPONSE.

-- I CONTINUE TO VALUE THE ROLE OF BILL MURPHY, CHRIS
POWELL, GATA, AND THEIR FRIENDS. I THINK THEY HAVE
RAISED MANY ISSUES. ISSUES SUCH AS MARKET MANIPULATION
ARE SERIOUS ALLEGATIONS REQUIRING A SERIOUS FORUM, SUCH
AS A COURT OF LAW. THERE ARE A NUMBER OF OTHER ISSUES
ON WHICH I THINK GATA HAS DONE GOOD SERVICE TO THE GOLD
INDUSTRY AND ITS STAKEHOLDERS.

-- I CONTINUE TO THINK THAT THE LEVEL OF DISCLOSURE ON
GOLD LENDING BY BOTH CENTRAL BANKS AND BULLION BANKS
LEAVES MUCH TO BE DESIRED. GOLD PRODUCERS ARE REQUIRED
TO DISCLOSE IN GREAT DETAIL (EVEN MORE SO SINCE FAS
133), AND WE DO SO. WE AS A COMPANY HAVE CALLED
PUBLICLY AND LOBBIED PRIVATELY FOR GREATER, MORE
REGULAR, AND MORE MEANINGFUL DISCLOSURE OF LENDING
ACTIVITY BY BOTH CENTRAL BANKS AND BULLION BANKS.

-- THIS COMPANY HAS IN THE PAST MADE A FINANCIAL
CONTRIBUTION TO GATA. I HAVE TRIED SEVERAL TIMES
(UNSUCCESFULLY,- NOT THROUGH LACK OF EFFORT ON MY OR
HIS PART) TO MEET BILL MURPHY. I WILL CONTINUE TO TRY.

-- I CAN SEE MERIT IN A MEETING BETWEEN BILL AND THE
WORLD GOLD COUNCIL PUBLIC POLICY STAFF, ESPECIALLY
ROBERT PRINGLE, WHO IS THE INTERFACE BETWEEN THE WGC
AND THE CENTRAL BANKS. I WILL PURSUE THIS.

Question 2. Assuming AngloGold wins its bid for
Normandy, is AngloGold's interest in a lesser or slower
liquidation of Normandy's hedge book than would be the
case with Newmont? Might it be greater?

2. MY SENSE IS THAT BOTH NEWMONT AND OURSELVES WOULD
APPROACH THE NORMANDY HEDGE IN THE SAME WAY, AT LEAST
FOR THE FIRST LITTLE WHILE. WE BELIEVE THAT NORMANDY IS
OVERHEDGED, AND WE WOULD DELIVER INTO HEDGE CONTRACTS
AS THEY BECAME DUE, AND PERHAPS BUY BACK PARTS OF THE
BOOK AS ECONOMIC CIRCUMSTANCES MADE THIS POSSIBLE.

WHERE WE WOULD PROBABLY DIFFER IS THAT WE WOULD NOT RUN
THE NORMANDY BOOK DOWN TO ZERO. WE THINK THAT A MEASURE
OF FORWARD SELLING IS A PRUDENT PART OF BEING A LARGE
PRODUCER, SIMILAR IN MY VIEW OF A LARGE PRODUCER OF
ANYTHING SELLING SOME PART OF HIS PRODUCTION IN TERMS
OF LONG-TERM CONTRACTS. IF WE COULD DEAL DIRECTLY WITH
END USERS, THIS WOULD BE ALL THE BETTER. I DON'T WANT
TO MAKE TRADERS RICH!

3. As chairman of the WGC, can you comment on whether
the council has any special interest in United States
policy toward gold, and particularly in the accounts of
the Exchange Stabilization Fund, in which the gold
market analyst James Turk claims to have found evidence
of improper government involvement in the gold market?
It all seems a bit scary to me.

THE WORLD GOLD COUNCIL BELIEVES THAT GOLD HAS A VALID
AND INDEED CENTRAL ROLE TO PLAY IN THE FOREIGN RESERVES
OF ALL NATIONAL BANKS. IT IS THE ONLY ASSET THAT IS NOT
SOMEBODY ELSE'S LIABILITY. IT IS ALSO THE MOST LIQUID
INTERNATIONAL CURRENCY AFTER THE DOLLAR. THE WGC IS
CONSTANTLY ACTIVE ENCOURAGING PRESENT HOLDERS OF GOLD
FIRSTLY NOT TO SELL, AND SECONDLY, IF INTENT ON
SELLING, TO SELL IN A WAY THAT DOES NOT DISRUPT
MARKETS. (SEE SWITZERLAND IN CONTRAST TO BRITAIN IN
THIS REGARD). THE WGC ALSO HAS A CAMPAIGN TO PERSUADE
BANKS TO BUY MORE GOLD RESERVES, WHICH IS HAPPENING.
(SEE RUSSIA AND CHINA, FOR EXAMPLE).

IN REGARD TO THE UNITED STATES, ALL OF THE ABOVE
APPLIES. HOW DETAILED THE DISCUSSION IS ON MATTERS SUCH
AS THE ESF I DO NOT KNOW AND WILL INQUIRE.

SOME OF THESE ISSUES ARE DEALT WITH IN THE REG HOWE
COURT CASE.

4. You have stated that, for market-related reasons,
AngloGold wants to reduce its own hedging and
especially Normandy's hedging. Can you share those
reasons with an investor like me, or at least comment
on what you see as the prospects for the gold price?

ANGLOGOLD'S POLICY HAS BEEN TO HEDGE A MAXIMUM OF 50
PERCENT OF FIVE YEARS' PRODUCTION. THIS IS MODEST BY
AUSTRALIAN STANDARDS. WE HAVE NEVER REACHED THIS LIMIT.
WE SEEK ONLY THAT NECESSARY LEVEL OF REVENUE SECURITY
TO ENSURE THAT OUR COMPANY CAN BE CONSISTENTLY
PROFITABLE, AND THAT WE ARE ABLE TO CONTINUE TO BE A
SIGNFICANT DIVIDEND PAYER.

FOR NOW, WE BELIEVE THAT THERE IS MUCH MORE UPSIDE THAN
DOWNSIDE ON THE GOLD PRICE, AND INDEED OUR PREFERRED
SCENARIO ON THE GOLD PRICE WOULD SEE A PRICE IN THE
EARLY $300s FROM 2003. HOWEVER, BEING CONSERVATIVE, WE
CONTINUE TO PLAN THE COMPANY AT SPOT PRICES.

BECAUSE OF THE ABOVE WE HAVE RUN OUR HEDGE DOWN FROM 18
MILLION OUNCES SOLD FORWARD AT 1 JANUARY 2001 TO 14
MILLION TODAY. WE ARE LIKELY TO CONTINUE TO RUN THE
HEDGE DOWN IN PREVAILING ECONOMIC CIRCUMSTANCES.

5. Does the WGC have a lobbyist in Washington and/or
any contact with the U.S. Treasury Department and the
Federal Reserve Board about gold policy?

THE WGC DOES NOT HAVE LOBBYIST PER SE ANYWHERE. IN THE
UNITED STATES IT DOES HAVE A STAFF MEMBER WHO HAS BEEN
PROMOTING INSTITUTIONAL INVESTMENT IN GOLD BULLION
(SCOTT RAM) AND HE HAS HAD SOME CONTACT WITH THE
TREASURY. THE CLOSEST THE WGC CAME TO THE ROLE YOU
DESCRIBE WAS ITS ACTIVE OPPOSITION TO THE PROPOSED SALE
OF INTERNATIONAL MONETARY FUND GOLD RESERVES TO FUND
THIRD WORLD DEBT -- A CAMPAIGN THAT WAS SUCCESSFUL.

HOPE THIS HELPS!

BOBBY GODSELL

* * * * * *

On behalf of GATA, I have been to Vancouver and Toronto
in Canada: New York twice, Washington three times, New
Orleans twice, Denver, Austin, Texas and Fairbanks,
Alaska in the United States; Paris; and to Johannesburg
twice, Durban twice, and Cape Town and Pretoria in
South Africa.

On January 7 I travel back to Washington to attend a
conference titled quot;Federal Reserve: Myth vs. Realityquot;
at the National Press Club and meet Robert Auerbach, a
conference coordinator, who will speak about waste and
abuse in the Federal Reserve.

Auerbach, a former economic adviser to the House Joint
Economic Committee, wrote quot;That Shreddin' Fedquot; in the
December 10 edition of Barron's:

quot;Just 18 minutes of Watergate tapes were erased, while
the Fed's 'edits' veil years of historic record.

quot;The Federal Opem Market Committee also has shredded
its unedited transcripts for 1994, 1995, and 1996. FOMC
members were told in 1995 that, even though they were
'not permitted' to discard 'raw transcripts' of
meetings before 1994, future unedited transcripts would
be 'thrown out' and only transcripts edited by the Fed
would be retained.quot;

This is most important to GATA because of our own
evidence of an extensive cover-up of the manipulation
of the gold price, evidenced in part by our own
discovery in the 1995 FOMC transcripts.

At a January 1995 FOMC meeting, Virgil Mattingly, the
general counsel to that committee, made the following
statement:

quot;It's pretty clear that these ESF operations are
authorized. I don't think there is a legal problem in
terms of the authority. The statute [31 U.S.C. s. 5302]
is very broadly worded in terms of words like 'credit'
-- it has covered things like the gold swaps -- and it
confers broad authority.quot;

The GATA army bombarded senators, congressmen, the U.S.
Treasury, and Alan Greenspan asking for an explanation
of this stated reference to ESF gold swaps. This was
pursuant to our army's receiving hundreds of letters
from senators and congressmen via the U.S. Treasury
asserting that the ESF quot;has not held any positions in
gold since 1978.quot;

The heat became so intense that Greenspan felt
compelled to respond to Kentucky Sen. Jim Bunning by
forwarding a memo Mattingly had written Greenspan.
Mattingly stated the following:

quot;Given the passage of time, some six years, I have no
clear recollection of exactly what I said that day, but
I can confirm that I have no knowledge of any 'gold
swaps' by either the Federal Reserve or the ESF. I
believe that my remarks, which were intended as a
general description of the authority possessed by the
secretary of the treasury to utilize the ESF, were
transcribed inaccurately or otherwise became
garbled.quot;

That just does not cut it, and it fits with Professor
Auerbach's revelations.

It would be my pleasure to meet with Bobby Godsell any
time and any place following my trip to Washington.
While I would like to present our evidence of the
manipulation of the gold price to him, a full
examination of that subject can be left to the U.S.
District Court for the time being, as he so notes.

There are other issues that can be immediately
addressed that could have a dramatic impact on the
price of gold, the South African Government, gold
producers, and the people of sub-Saharan Africa:

1. AngloGold has reduced its hedges by 4 million ounces
so far this year. Many other gold producers have also
reduced their hedges. Why has this had no impact on the
gold price?

2. At the GATA African Gold Summit, macro-economist
Frank Veneroso presented six methods he used to
calculate central bank gold loans, which he estimated
at from 10,000 to 16,000 tonnes -- levels two to three
times those acknowledged by the gold industry. GATA has
evidence that the central banks and the gold cartel are
trying to hide the true numbers.

The clue to the startling discrepancy between the
Veneroso numbers and the ones used by the gold industry
may lie partly in the treatment of gold swaps by the
central banks. For example, the IMF was asked:

quot;Why does the IMF insist that members record swapped
gold as an asset when a legal change in ownership has
occurred?quot;

The IMF answered:

quot;This is not correct. The IMF in fact recommends that
swapped gold be excluded from reserve assets. (See Data
Template on International Reserves and Foreign Currency
Liquidity, Operational Guidelines, para. 72.quot;

Yet the following can be found on the Internet site of
the central bank of the Philippines:

quot;Beginning January 2000, in compliance with the
requirements of the IMF's reserves and foreign currency
liquidity template under the Special Data Dissemination
Standard (SDDS), gold swaps undertaken by the BSP with
non-central banks shall be treated as collateralized
loans. Thus, gold under the swap arrangement remains to
be part of reserves and a liability is deemed incurred
corresponding to the proceeds of the swap.quot;

The central banks of Portugal, Finland, and the
European Central Bank itself have all confirmed in
writing to GATA's Andrew Hepburn the acceptability of
the Philippines' treatment of gold swaps.

Don't the governments of the African gold-producing
countries, the gold producers, and the World Gold
Council deserve to know what the truth is? GATA would
like to see an immediate clarification on this issue
from the various central banks, the IMF, and the Bank
for International Settlements.

That truth could be of incalculable impact on the well-
being of the poor in Africa, for then the gold price
would rise above $600 per ounce.

3. Former U.S. Treasury Secretary Lawrence Summers and
the present treasury secretary, Paul O'Neill, have
refused to answer any questions posed by many senators
and congressman. What are they afraid of revealing and
why have they been silent on this serious issue for
three years? GATA would like to formulate a series of
questions for Secretary O'Neill.

In conclusion, I would like Bobby Godsell and all our
gold producer supporters to know that nothing has
touched Chris Powell and me more deeply than the
following e-mail, received a few days ago. It says it
all for us and reinforces our belief that we are doing
the right thing and going in the right direction:

* * *

My name is Hendrick Masemola from South Africa. I
learned about your great work in the December issue of
New African magazine, and I went through your Internet
site.

All I can say is that you are doing a wonderful job. I
am very touched by your courage in pursuit of the
truth. I am also aware of the risks you are putting
yourselves in, together with your beloved families, in
search for truth.

I also think that you are aware that you are taking on
the big guns who won't just sit down and watch you guys
exposing them, if not taking away their daily bread. I
can only say that now that you have gone this far,
please do not give up. The very same truth you are
after will set you free.

And if your goals are not achieved now, know that an
awareness has been created, and we will take the fight
on, and if we fail, we will make sure that the coming
generation continues until the goal is achieved. I
think that wherever you guys are going to be, you will
be happy.

I am a master's student in politics at the University
of South Africa (UNISA) and I am employed by the
Department of Politics as an academic assistant. I wish
that we can learn about this kind of politics because
it affects our lives directly, rather than the
philosophy of Aristotle and such.

On behalf of the poor people you are fighting for,
those who are aware of your work and those who are not,
and those who can read and those who cannot, I would
like to say: Thank you and please do not give up and
never let the sun go down on us.

Hendrick Masemola

* * *

Thank you, Hendrick, for putting so much into
perspective as the year 2001 fades into the history
books.