CMRE''s fall meeting scheduled for November 20 in New York City

9:24p ET Monday, September 30, 2002

Dear Friend of GATA and Gold:

Thanks, congratulations, and a hearty quot;watch
your back!quot; to the Miami Herald's business
reporter, Jane Bussey, whose story about quot;Mr.
Gold,quot; GATA's friend Jim Sinclair, chairman
of Tan Range Exploration, was published in
the Herald's Sunday editions. This is Bussey's
second major story about gold in four months.
No one has done more than she has to bust the
code of silence about gold in the U.S.
mainstream press. Pray for her and her
newspaper, which is among the most important
in the country.

Bussey's story about Sinclair is appended
here.

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

* * *

`Mr. Gold's rules for investors

BY JANE BUSSEY
Miami Herald
jbussey@herald.com
Sunday, September 29, 2002

a href=http://www.miami.com/mld/miami/business/4167975.htmhttp://www.miami.com/...

Although he has been dubbed quot;Mr. Gold,quot; James
Sinclair wears his mantle as the precious
metals expert almost as a burden. quot;What did
you do to pull this duty?quot; he laughs before
he starts to talk the glitter out of gold
investing.

Gold funds and gold stocks are among the very
few shining stars of the tumbling markets
this year, but Sinclair believes investing in
the precious metal is all about immutable
requisites of the market.

The price of an ounce of gold has risen from
of $267.70 in the second quarter of 2001 to
$312.70 in the second quarter of this year.
But most brokers and financial advisers are
still not suggesting gold investments.

For Sinclair, who personaly made $15 million
in 1980 by selling gold when it hit a high of
$887.50 and then predicted it would languish
in a 15-year slump, gold is not about
psychology but about a series of measuring
sticks.

quot;You should do nothing because of fear,quot; said
Sinclair, who is chairman and CEO of Tan
Range Exploration, a publicly listed gold
mining company.

quot;If it's based on fear, you are in the wrong
arena and should see a psychologist,quot; he
added.

quot;The only reason to invest in gold is that
there are five market fundamentals,quot; said
Sinclair, who lives on a Connecticut estate
and answers his own telephone at his office.

These five market fundamentals include:

-- The U.S. current account (the broadest
measure of the economy's competitiveness with
the world) must be in deficit and growing
ever larger. The U.S. current account deficit
is 4.5 percent of the gross domestic product.
Markets traditionally become nervous about
the deficit when it hits 5 percent.

-- The U.S. dollar must have hit a high and
be on a downward trend.

-- The prices of general commodities must be
going up.

-- Confidence in paper assets must be
falling.

-- The bond market must have hit a high and
be on the way down.

Sinclair said that all five conditions must
be in place to be assured of a bull market
for gold.

quot;Of the five requisites, four are there,quot;
Sinclair said, noting that the only one still
absent is falling bond prices.

Gold closed Friday on the New York Mercantile
Exchange at $319.70.

quot;For gold to make a new high about $330 --
which seems to be the Maginot Line now in the
minds of those who have involvement in that
field -- it's got to have No. 5 come in,quot; he
said.

Market change

But Sinclair also notes that the gold market
has changed from earlier times. Big banks and
to a lesser extent mining companies have
large derivative positions in gold. The
mining companies routinely sell unmined metal
forward at fixed prices to protect themselves
against further price drops.

Banks have huge gold derivatives, ranging
from deferred-sales contracts to hedged
instruments, swaps and futures-linked devices
that were devised during the 1990s to
generate extra income while gold prices
descended.

This is a technicality of the market that
will affect the price of gold, Sinclair said.
Gold derivatives are also part of the
question mark.

If the price of gold rises above a certain
level, then the automatic risk-control
systems that tell banks when their risks are
getting too high alert traders and spark
nearly automatic moves to cover short
positions.

There is a certain danger for the entire
trading system, since nearly all the
derivatives have shorted gold and any risk
alert will trigger all banks to cover their
shorts.

Covering of the shorts in a market -- where
the actual amount of physical gold is small
compared to all the derivative positions and
where daily trading is small compared to
exposure -- will cause prices to rise.

This technicality -- banks' automatic risk-
control systems -- could affect the price of
gold.

Bonds are key

But the bond market is the key condition that
investors can watch out for, Sinclair said.

quot;The investment decisions of the non-U.S.
holders of U.S. government securities is the
singular most fundamental characteristic that
will determine if there is a long-term bull
market in gold,quot; he concluded.

After putting millions of dollars of his own
money into what he hopes will become a rich
gold vein in Tanzania, the rise of the price
of gold is more than academic for Sinclair.

But he focuses on the fundamentals.

quot;My own conclusion is, yes, gold will go
higher,quot; Sinclair concludes.

But Sinclair does admit that he has not
always been correct about gold. For instance,
the 15-year price slump he predicted. quot;I was
wrong. It's been 22,quot; he said.