If Merrill Lynch can rig one market....

1:30 p.m. EDT Friday, May 21, 1999

Dear Friend of GATA and Gold:

GATA has been mentioned again on the Dow Jones wire.
The following column doesn't really say much but at
least it shows that GATA's leadership of the gold
cause in the world is gaining recognition.

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

* * *

Mark to Market: All That Glitters Is Not Gold

By David G. Pearson
A Dow Jones Newswires Column

Paris (Dow Jones) May 21, 1999

One of the most interesting things about this job is
that you get to rub shoulders with the world's
financial movers and shakers.

This is great cocktail party conversation fodder for
impressing your fellows about Bob, Alan and Larry
and how their tennis games are improving.

In this neck of the woods, however, the party chat
about Dominique, Jean-Claude, Hans and Wim tends to
be less interesting than the punch bowl.

It's typically about who's next in line to take over
which financial institution and why he'll be no good
because he went to the wrong high-falutin' school 30
years ago.

But my ears did prick up the other day when I was
schmoozing with Bank of France officials in the
Central Bank's golden gallery, an overpowering
setting of gilt, mirrors and painted ceilings
designed to make you feel inferior, whatever your
net worth.

BOF Governor Trichet was commenting on his policy
regarding official gold reserves at a time when the
solidarity of central banks is fraying at the edges.

You'll recall that the foundations of the bastion of
confidence in gold as the central banker's nuclear
weapon were rocked on May 7 when the Bank of England
announced plans to auction off half of its gold
stocks. The BOE sale will involve a few hundred
tonnes of the stuff.

And it's looking increasingly likely that the IMF is
going to liquidate at least 10 million ounces of its
gold reserves to generate income for financing debt
relief. That, incidentally, is necessary because
some governments are scared to ask their lawmakers
for more money for poor folks.

Central banks in Belgium, Argentina, Canada,
Australia, and the Netherlands have also been selling
off their bullion bars in recent years, simply
because it's a non-performing asset and they're
under increasing pressure to create income.

Understandably, the bullion market has got the
heeby-jeebies. The price of bullion plunged to its
lowest level in 20 years this week, and gold mine
shares have lost 20% over the past fortnight.

Finger in the Dike

And now I see that a group of gold investors in the
U.S. has formed the Gold Anti-Trust Action Committee
with it own web site (www.gata.org) giving evidence
of alleged collusion among financial institutions
and central banks to keep the price of gold below
$300 an ounce. Friday morning's London gold fixing
was $274.85.

GATA's aim is to expose huge speculative short
positions taken by financial institutions and
bullion banks. Their theory is that buyers will
flock back to the market when they realize the
global short position is too large to close without
causing a substantial rise in the price.

To get back to the BOF's gilded halls, Trichet was
saying with almost religious fervor that The Bank of
France has no intention of selling one gram of the
3,184 tones of bullion under our feet.

Like the legendary Dutch boy bravely plugging the
hole in the dike with this finger, Trichet argued
that the central banks of the U.S., Germany, France,
and Italy -- the world's four biggest holders of
gold -- will keep their gold stocks intact.

This suggests that gold bug central bankers, worried
sick by the prospect of dwindling balance sheets,
have been consulting with each other, and that
Trichet is their unofficial spokesman. Central Banks
in the euro-zone can't sell any gold without the
ECB's assent.

The conservatism is all the more surprising in view
of the fact that the Bank of France's annual report,
which Trichet was presenting, reveals that the book
value of France's gold holdings dropped by $3
billion last year due to the fall in the market
price without a gram being sold.

-END-

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