Howe files motion for more proceedings in case against BIS and U.S. government

Having read this far through the ruling, it
was becoming clear that the judge was
stretching to justify his conclusions. But
the most egregious statement was yet to come
in the tortured reasoning offered in the
following conclusion: quot;The 17 directors of
the BIS voted unanimously to adopt the
mandatory share redemption plan. Only two of
the directors, Greenspan and McDonough, are
defendants in this case. Given the votes of
the other directors, the share redemption
would have gone forward regardless of
Greenspan's and McDonough's votes.quot;

Aside from the fact that some of the other
directors may have voted differently if
Greenspan and McDonough had not been able to
vote, the issue here is the simple matter of
right or wrong. Theft is not made right just
because a preponderant number of directors
self-proclaim it to be right.

I stopped reading here. I completed only 35
pages. Why go on? I got the picture.

Clearly, to my mind the judge was grasping
for reasons to throw the case out, and
frequently, his twisted logic defies reason.
A gold mining company has standing, but as a
shareholder of Freeport Gold's gold-
denominated preferred shares, Reg does not?
Then there's the comment that Greenspan and
McDonough are only two votes at the BIS, and
they would have been outvoted by the other
directors anyway.

So Reg loses in court, but he still wins. Reg
wins because this ruling appears so contrived
in so many respects that even the most casual
observer who chooses to read it will readily
understand that this ruling says little about
justice but everything about power. In the
end, this ruling says that the defendants
Greenspan, Summers and McDonough are above
the law. Even the Stuart kings of Britain
yearned for such unbridled power. But this
privilege of sovereign immunity does not
extend to the other defendants, which brings
up another reason Reg wins.

Reg wins because the court did not say that
his allegations were insufficient. Thus, the
judge practically provides a map that
explains how this case can go forward.

First, the judge has in effect invited a
mining company to take up this case, because
he states that a mining company has
quot;standingquot; and would therefore be an
quot;appropriate plaintiffquot; under the law.
Second, and perhaps more importantly, the
judge did not say that the factual
allegations made by Reg are insufficient to
bring a price-fixing case. That opening left
by the judge -- which is big enough to drive
a Mack truck through -- must be making the
attorneys for JP Morgan Chase, Deutschebank,
Citibank, Goldman Sachs, and the BIS very
nervous indeed. None of these banks qualifies
for the privilege of sovereign immunity.

The upshot is that the judge is allowing this
case to go forward, but with a different
plaintiff, and provided further that
Greenspan, Summers, and McDonough are not
named as defendants. And it is not hard to
imagine what is necessary to make that event
happen.

There are only two ingredients needed to move
this case forward -- an attorney well versed
in price fixing, and a gold mining company.
Here is how I think we could expect to see
this scenario develop at a purely practical
level.

It would require that the attorney works on
contingency, and the gold mining company
hires this attorney to bring suit. I would
expect that the attorney would require
payment only for out-of-pocket expenses, with
the balance of his remuneration coming on
contingency if he successfully litigates the
case.

This case could even be a class-action suit
on behalf of all gold mining companies
injured by the price fixing of the named
bullion banks. The claims could easily run
into the billions, which would be more than
sufficient to attract some top attorneys
experienced in litigating price fixing cases.

There are some 10 million ounces of gold
mined in the United States each year, or some
45 million ounces over the last five years. I
can easily make -- and others can as well --
the case that gold should be at least $500
per ounce, based on historical valuations or
and other methodologies that measure gold's
value. For example, Frank Veneroso's work
shows that gold's equilibrium price is more
than $600 per ounce. But in fact the average
price during the past five years when the
alleged price fixing has occurred has been
only $288 per ounce. Even if we accept a
valuation of only $500 valuation, the
potential claims are huge.

Because of the price fixing, sales revenue of
the U.S. gold mining industry averaged $288
ounce instead of $500 per ounce. At $212
times 45 million ounces, revenue was $9.5
billion less than it would have been if there
was no price fixing. And this value shows
only the impact on the U.S. gold mining
industry. There may in fact be an opportunity
for non-U.S. gold mining companies to be
involved in a class-action suit, which
considerably expands the scope of the claim.
Using this same methodology, lost sales
revenue for the gold mining industry
worldwide during this five-year period
approaches $80 billion.

Just a fraction of that amount of money is
large enough to attract a first-class
attorney specializing in price fixing, and
willing to work on contingency. All we need
now is a U.S.-based gold mining company ready
to accept Judge Lindsay's invitation to
pursue Reg's allegations of price fixing.

OK, gold mining companies. Which of you will
it be?

----------------------------

James Turk is editor of The Freemarket Gold amp;
Money Report, the founder of GoldMoney.com, a
consultant to the Gold Anti-Trust Action
Committee, and the investigative reporter who
found and disclosed the bookkeeping records
of the U.S. Exchange Stabilization Fund's
intervention in the gold market. His e-mail
address is jamesturk@goldmoney.com.

---------------------------------------------

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