Globe and Mail reports Blanchard''s victory over Barrick and Morgan Chase

J.P. Morgan, Barrick gold conspiracy to get day in court

By Ian Karleff
Financial Post, Canada
a href=http://www.nationalpost.com/financialpost/story.html?id=CD4A73F1-4BC5-ht...
4E0E-9FB0-F5A4F13DAA8E

Wednesday, September 10, 2003

Gold conspiracy theorists have finally found a receptive
court to hear allegations that J.P. Morgan Chase amp; Co.
and Barrick Gold Corp. conspired to manipulate gold
prices.

Gold coin and bullion dealer Blanchard amp; Co. convinced
the Louisiana District Court yesterday that its anti-trust
lawsuit had sufficient merit to enter the discovery process,
despite Barrick's contention the lawsuit is quot;ludicrous.quot;

quot;I think this is a very significant development getting this
thing into a court of law, and into the discovery process,
because some difficult questions might be asked,quot; said
John Embry, portfolio manager at Sprott Asset
Management in Toronto.

At the crux of the lawsuit are allegations that Barrick and
J.P. Morgan concocted a scheme to depress gold prices
through a complex system of derivative trades and
off-balance sheet deals.

quot;The court finds that the complaint adequately states a
claim for Barrick's acquisition or attempted acquisition
of monopoly power in the gold-mining market and
Morgan's acquisition, or attempted acquisition, of
monopoly power in the gold derivatives market,quot; wrote
Judge Helen Berrigan.

Barrick and J.P. Morgan have 10 days to ask for
permission to appeal the decision to the 5th Circuit
Court of Appeal.

Barrick and J.P. Morgan's motives are alleged to be
twofold and far-reaching in that Barrick is accused of
cherry-picking competitors via acquisitions thanks to
depressed gold prices, which enabled it to morph
into the world's second-largest gold producer in only
20 years.

Contrary to popular wisdom, falling gold prices have
proved lucrative to Barrick, earning the company
US$1.7-billion in a five-year period as it locked in
gold sales at higher prices.

Unlike most of its competitors, Barrick proved
correct in its bet that gold prices were on the decline.

Furthermore, the suit's supporters say a low gold
price lent support to a strong U.S. dollar, erased fears
of inflation and allowed interest rates to stay artificially
low, thereby giving rise to an over-inflated stock market.

The allegations have circulated on the Internet and in
select circles for years, but have generally been
dismissed as unsubstantiated claims from fanatical
gold bugs. If the case is not scuttled by an appeal, it
may finally put to bed what is one of the most enduring
controversies in the public markets.

Observers say the location of the trial is also significant
because courts in the Southern states are more receptive
to suits filed against big corporations, especially those
domiciled in the North or in Canada.

An earlier lawsuit was dismissed on technical grounds
in a U.S. District Court in Boston in March, 2002, after
the judge ruled the plaintiff -- Reg Howe -- was inappropriate,
in that he had not personally suffered direct injury, unlike a
bullion dealer or private gold investor.

New Orleans-based Blanchard was able to argue that as the
largest rare-coin dealer in the United States, demand for its
products has been irreparably harmed because its
customers are no longer interested in its products thanks
to declining and stagnant prices.

quot;Boston is establishment country, and Louisiana is more
maverick. They are willing to listen and not so influenced
by the mainstream establishment,quot; said Bill Murphy,
chairman of the Gold Anti-Trust Action Committee.

Mr. Murphy said the price of gold would be at US$680
an ounce, or 79 percent higher than current prices, if
bullion banks were not free to manipulate the price by
borrowing an estimated 15,000 tonnes of the 32,000
tonnes of gold held by central banks around the world.

Legal challenges against large corporations tend to have
better luck in winning blockbuster settlements in Southern
states.

Research In Motion is in the midst of a patent litigation
suit with a Chicago-based inventor, which the maker of
BlackBerry e-mail devices initially dismissed as a
frivolous suit, not worthy of mentioning to investors.

The Virginia Court, known as the Rocket Docket for its
speedy handling of cases, has since hit RIM with an
injunction that has cost the firm millions in legal costs
and forced it to put into escrow 5.7 percent of product
sales.

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