In the heart of Nevada gold country, hope that times are changing

4p ET Sunday, April 28, 2002

Dear Friend of GATA and Gold:

The story below from Canada's Financial Post,
about a new bullion investment fund, mentions
GATA's work.

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

* * *

Bullion fund holds equal weights
in gold, silver, and platinum

By Jonathan Chevreau
Financial Post (Canada)
April 25, 2002

More than two years after it was originally
meant to be released, the Millennium
Bullionfund has finally received regulatory
approval and is available for sale in
Ontario. Registration in other provinces is
expected at the end of the summer.

Managed by Toronto-based Bullion Management
Services Inc., the mutual fund trust is
invested one third in physical gold, one
third in silver bullion and one third in
platinum, says president Nick Barisheff.
There are no derivatives, futures contracts
or options, just the actual physical precious
metals, which will be delivered to investors
if requested. Up to 5% cash may be held.

Otherwise, the bullion is held in a
segregated vault at the Bank of Nova Scotia,
with twice-yearly inspections by auditors at
Ernst amp; Young. Barisheff buys each metal at
the prevailing spot price and has insurance
to protect against destruction or theft. The
annual management fee is 2.25%, which allows
the firm to pay dealers trailer fees
comparable to other mutual funds. There is
also an early redemption fee.

Barisheff created the fund for Canadian RRSP
and RRIF investors who before now have not
been able to hold bullion either directly or
through an open-ended fund in registered
plans. Most RRSP investors participate
indirectly through precious metals mutual
funds, which usually own mining stocks rather
than the underlying bullion. The only other
fund to hold bullion is the Central Fund of
Canada Ltd., a closed-end fund.

Barisheff concedes gold stocks or mutual
funds offer a more leveraged play but views
his new fund as a cash equivalent that hedges
against paper-based assets. Gold bullion is
up from US$254 this time a year ago to more
than US$300 currently, but some precious
metals funds are up 100%.

If the global economy deteriorates the way he
expects it might, Barisheff believes physical
metals may hold their value better than mere
paper, whether stocks or funds.

For history to repeat gold's rise from US$35
in the 1970s to US$800 in January, 1980, gold
would have to rise to US$6,000, a possibility
Barisheff can envision.

He's convinced the global economy of the
early 2000s is gloomier than the conditions
of the 1970s which contributed to the last
surge in gold prices.

His Web site at www.bullionfund.com outlines
the forces he believes will make the last
year's runup a mere prelude to what may come.
If the artificial supply of leased gold were
removed, that alone would make the
equilibrium price of gold more than US$700 an
ounce.

Barisheff originally developed the fund with
a hope to beating the expected Y2K rush to
precious metals. Delays from the Ontario
Securities Commission prevented him making
the deadline, but the fund finally was
approved in January and was available for
sale in March.

Barisheff says precious metals currently
offer a quot;rare risk/reward relationship.quot;
While he sees a huge upside, he believes that
because the gold price is near its production
cost, gold's floor is US$250.

Demand for gold, silver and platinum
outstrips mine supply, he says. With silver,
quot;a situation is rapidly developing in which
above-ground stocks will be completely
depleted in 2002.quot;

Barisheff has his eye on a dozen possible
events that could trigger the next rise in
metals prices. These include war, terrorism,
an unexpected collapse in derivatives
markets, a move by foreign currency holders
to the euro and a court victory by the Gold
Anti-Trust Action Committee.

But haven't latecomers to the gold party
already missed most of the run? Barisheff
doesn't think so, saying precious metals are
still priced near 20-year lows. At US$4.60 an
ounce, silver is trading at one tenth of its
peak price of more than US$50, while platinum
at US$515 an ounce is at half its peak of
US$1,085.

Measured against the Dow Jones industrial
average, Barisheff believes gold is still a
bargain. In the fall of 1999, the Dow/gold
ratio peaked at 45 to 1, compared to a 1 :1
ratio in 1980. Today the ratio is 27 to 1.

A similar view is dispensed by veteran stock
market watcher Richard Russell at his Dow
Theory Letters. Russell is bearish on the
U.S. market and bullish on gold. He has been
doing a series of articles on quot;fiatquot; paper
currencies no longer pegged to gold,
including the U.S. dollar. But this week
Russell suggested gold bullion and especially
gold shares may have risen quot;too fast and too
far.quot;

Vancouver-based investment adviser Hans
Merkelbach mentions the standard disclaimer
that quot;past performance is not a guarantee for
future results,quot; but says new investors in
gold mutual funds quot;won't be disappointed
going forward, the odd volatile correction
notwithstanding.quot;

For the next leg upward to occur, Merkelbach
believes the XAU (Philadelphia Index) has to
break out above its resistance level of
73.75, and the HUI (the Unhedged Index) must
break out above 104.83. quot;A close of bullion
above US$ 305 sets bullion up for a fast move
to US$320 to US$330, which should add about
20% to 25% in value to gold stocks.quot;

Traditional asset allocation advice is to
restrict precious metals exposure to 10% of a
total portfolio, as insurance against the
kind of calamities Barisheff expects. He
himself is almost 100% in precious metals
bullion or stocks, but warns the difficult
part will be knowing when to sell.

For average investors, he cites the World
Gold Council suggestion that a minimum of 6%
of a portfolio be allocated to the sector. In
the interests of disclosure, that's about the
allocation of my personal portfolio to the
sector.