G O G A T A C O M M E N T A R Y

Dear GATA Egroup Members,

Here follows GATA's "SHAKA-ZULU" strategy, as set out by Bill Murphy,
Chairman of GATA, for members of the financial website
www.lemetropolecafe.com, which he owns and edits. I look forward to
receiving your comments!

Boudewijn Wegerif
Vice-chair GATA and GATA Egroup's Moderator, G O G A T A

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SHAKA ... ZULU
by Bill Murphy

I just received this email from an out-of-work Australian miner:

"Why does the Reserve Bank of Australia always sell when the gold price
approaches $300?

"Australian mining companies (directors on Board of Reserve) have
forward sales until 2002 with a low price, and with a low Australian
dollar/U.S. dollar rate. They must be making a fortune. So much so that
they can buy to fill contracts rather than mine gold.

"When gold was floated, didn't the reserve banks pledge not to sell
reserve gold onto the commercial market?

"Something must be done. I and 20,000 other Australians have been out of
work for nearly two years."

I have promised the Australian miner that something WILL be done.

For the Gold Anti-Trust Action Committee has devised a strategy to take
on and defeat those who are colluding to suppress the price of gold --
including gold-mining companies that are helping to devastate their own
industry in the hope of picking up the pieces when their competitors
have been ruined.

GATA's strategy is patterned after the strategy of the great South
African Zulu warrior, Shaka. As a youth he was shunned by his own people
and went into exile. But he returned to become a leader of the Zulus and
devised a plan to conquer their adversaries. Previously wars between
tribes were more for show; there was no real fight. It reminds us of
what is going on in the gold industry today. There is a lot of
complaining but no one is acting against those in the industry who are
helping to ruin it.

We are going to change that.

Shaka devised the strategy of the enveloping horn. His attacking Zulu
warriors massed in a diamond-like formation. The piercing point of the
diamond struck first. While the enemy engaged in battling the Zulu
warriors at the point of the diamond, the diamond's left and right
flanks bolted out to the sides and enveloped the enemy in the shape of a
horn. Before the enemy knew it, he was flanked, surrounded, confused,
and beaten.

GATA is now selecting a law firm to challenge gold's enemies in federal
court. That will be the point of our diamond. Those who are colluding to
keep the price of gold down will have a fierce battle on their hands in
court. And while we confront them there, we will envelop them on both
flanks.

On the left flank we will publicize to the news media, financial
authorities, and the public how short the colluders are, what they have
done to the gold industry, and how their reckless conduct is threatening
markets throughout the world.

Gold mine production in 1998 was about 2,529 tons. Gold demand was about
4,130 tons. That left a production deficit of about 1,600 tons. Gold
Fields Mineral Service estimates that central banks sold about 450 tons
last year. So 1,150 tons reaching the market had to come from other
sources. Much of that supply is the "leased" (borrowed) gold that the
colluding shorts have plopped into the physical market, confident that
they could keep depressing the price and buy the borrowed gold back
cheaper.

The problem for the shorts now is that the price of gold has gotten too
low and physical demand is exploding. The shorts are running into a
brick wall of demand. On top of that, we believe that the gold market
short position now may have reached 3,000 tons, a quantity that simply
cannot be covered in any reasonable time.

GATA believes that there was collusion in letting the Long-Term Capital
Management hedge fund out of a 300-ton short position in an off-market
transaction. For if, as it began to go bankrupt, LTCM had gone into the
open market to buy 300 tons of gold, the price of gold would have
soared.

WHAT IF THE SHORTS HAD TO COVER NOT JUST 300 TONS BUT 3,000 TONS?

GATA will direct media attention at this situation and turn up the heat
on the shorts.
We believe that total gold loans may be as high as 8,000 tons. For there
has been a deficit between production and use for years.

That brings us to the right flank of our battle.

We will confront the gold-mining companies that are excessively hedged,
and will call for a shareholder revolt against them. (See press release
below.) On the GATA web site now under construction we will document
excessive hedging by particular companies and urge their shareholders to
sell their shares and purchase shares of the gold producers that are not
excessively hedged or barely hedged at all.

We will applaud the companies that buy back their hedges and post that
information on the GATA web site so it may be circulated around the
world.

Here is an example of the kind of issue we feel must be addressed.

Anglogold of South Africa claims to be the world's biggest gold
producer. In the fouth quarter last year, though the price of gold was
below $300 and at rock-bottom levels, Anglogold raised its hedge
position to 11.8 million ounces from 8.1 million ounces.

That is a dramatic increase, and it means that Anglogold flooded the
market with gold in the fourth quarter.

The press release circulated by Anglogold in North America made no
mention of this extraordinary selling of gold. It was mentioned only in
South Africa, where Anglogold is required by law to disclose such sales.
Even there Anglogold did not make its extra selling clear; analysts had
to review the company's information carefully to figure it out.
Anglogold's recent commentary about the gold market failed to highlight
the company's own flooding of gold to a depressed market as a big factor
behind the stagnation of the price of gold.

To top it off, some major contributors to the World Gold Council met
last November, supposedly to discuss the problem of gold leasing.
Anglogold took the subject off the agenda.

Meanwhile, 20,000 Australian miners are out of work.

This is an outrage. With your help, we will turn rage on the likes of
Anglogold.
GATA believes that all of us together can make a difference and get
action, largely because of the power of the Internet. We are mobilizing
our "diamond" formation and about to attack with our "horn." We ask you
to post this mobilization alert everywhere you can and send it to all
the gold-mining companies that come to mind. We are mad as hell and are
not going to take it anymore.

"Shaka" ... "Zulu" -- so be it!

Bill Murphy
www.lemetropolecafe.com

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