Derivatives rise sharply at Freddie Mac since 2000

12:51a ET Saturday, June 21, 2003

Dear Friend of GATA and Gold:

Gold Corporation of Australia, operator of Perth
Mint Depository, has replied at length to GATA's
June 7 dispatch, an exchange between GATA consultant
James Turk and an Australian reader about the
security of various gold-related investments. Turk
explained the distinction between quot;allocatedquot; and
quot;unallocatedquot; gold and argued that the former is
safer.

As far as GATA can determine, Gold Corporation's
reply does not directly contradict anything Turk
wrote but rather makes a case for the security of
investing through Perth Mint because of the
guarantee provided by the state of Western Australia,
Perth Mint's refraining from gold lending and
derivative business, and its excellent credit rating.

GATA is glad to provide equal time, so Gold
Corporation's reply, written by its chief financial
officer, Richard Hayes, is appended here.

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

* * *

GOLD CORPORTATION REPLIES
TO GATA'S JUNE 7 DISPATCH

By Richard Hayes
Chief Financial Officer
Gold Corporation

I refer to a recent discussion between James Turk, editor
of the Freemarket Gold amp; Money Report, and a reader in
Australia, distributed by the Gold Anti-Trust Action
Committee Inc.

Turk has made statements regarding Gold Corporation and
the security of client precious metal in its Perth Mint
Depository programs (Perth Mint Depository Services and
Perth Mint Certificate Program) that are misleading and
require a response from the corporation to reassure
investors about the security of its depository services.

Gold Corporation

Gold Corporation is a statutory authority created by the
Gold Corporation Act 1987 and wholly owned by the State
Government of Western Australia. The activities of the
corporation are underwritten by a government guarantee
as described in Section 22 of the act. The state has an
AAA Samp;P rating, Samp;P's highest category.

An AAA-rated sovereign liability of this kind represents
the best available investment risk. Recent high-profile
corporate failures in the United States highlight the
need for investors to achieve greater security than
that provided by a private limited liability company.

Perth Mint Depository investors are very fortunate in
that they do not rely solely on non-guaranteed corporate
undertakings, third-party corporate structures,
third-party corporate governance procedures and
protocols, and the creditworthiness of counterparties
without an AAA Samp;P credit rating, like investors in
other precious metal programs.

Government Support

The premier of Western Australia recently reaffirmed
the state's support for PMD and GC's new Australian
Stock Exchange-quoted Perth Mint Gold product (PMG)
in a letter dated 21 March 2003. This letter appears
in the PMG Product Disclosure Statement, which was
submitted to the Australian Securities and Investments
Commission prior to the recent quotation of the PMG
product.

The premier noted that quot;the corporation's Perth Mint
Depository precious metal storage facilities are
attracting renewed interest from Australian and
international investors, in response to global
economic and financial market uncertainty. It is
gratifying to learn that Western Australia's
triple-A credit rating is an important reason why
investors are choosing Perth Mint Depository as
custodian of their precious metal assets, together
with the state government guarantee.quot;

For further details:

a href=http://www.goldcorp.com.au/gc/depository/perthmintgoldasx.asphttp://www....

GC's Statutory Accounts

Given Gold Corporation's unique status as a government-
guaranteed entity, it is clearly not directly comparable
to a limited liability company. Hence, it is incorrect
to imply that GC's balance sheet, as described in its
statutory public accounts, is a relevant issue for PMD
investors. GC and all PMD investors are covered by a
AAA government guarantee that underwrites delivery of
client metal at all times.

Status of Unallocated Metal

GC emphasises once again that all unallocated precious
metal held by PMD is safe and secure. PMD's growing
number of international clients clearly gain considerable
comfort from the fact that their precious metal is held by
an organization with an AAA Samp;P rating.

All client accounts are fully backed by precious metal
purchased by GC. Client unallocated precious metal is NOT
used by GC for short-selling transactions, derivative
activities, or leasing outside the group. GC is therefore
in a position at all times to meet its physical delivery
requirements.

GC has a legal obligation to ensure client precious metal
is always available for collection in a physical form
within a specific period from the date of receiving a
client's instructions under the terms of its depository
programs.

Clients who have PMD unallocated precious metal accounts
have the security of knowing that their accounts are
backed by precious metal. It therefore is incorrect to
imply that PMD's unallocated precious metal is merely an
unsecured quot;promise to pay.quot;

For further details:

a href=http://www.perthmint.com.au/gc/depository/depository_layout.asp?url=5htt...

Government Guarantee

With regard to the West Australian Government guarantee
in Section 22 of the Gold Corporation Act 1987, the
corporation is empowered to remit either currency or
deliver gold to a client, according to a client's
instruction. Clients certainly are not precluded by
the act from requesting and receiving physical gold
under any circumstances.

For further details:

a href=http://www.perthmint.com.au/gc/depository/depository_layout.asp?url=6htt...

Force Majeure

It is incorrect to suggest that GC can quot;relieve itself
of any obligationquot; under the force majeure clauses in
its client agreements.

The inclusion of force majeure clauses is standard
commercial practice. These clauses are designed to
provide a mechanism for institutions, be they government
or private corporations, to deal with specific events
that may occur and are outside of their control.
Furthermore, under a declaration of force majeure,
GC's obligations to its clients are suspended only.
GC is legally required to resume performance of its
obligations once it is no longer affected by the force
majeure.

Conclusion

The Perth Mint has more than a century's involvement
in gold trading, refining, and minting in Australia's
leading gold mining state. PMD's business mission is
to provide domestic and international investors with
the safest and securest location for storing their
precious metal assets. PMD has an increasing number
of loyal and valued clients precisely because of its
commitment to client precious metal security and
client service.