Beware, for GATA gets emotional about stock

10:45p EST Thursday, December 16, 1999

Dear Friend of GATA and Gold:

Here's a story with the latest development about the
noted gold bear Martin Armstrong, whose latest problem
seems to be that his girlfriend is giving evidence
against him. I know that Armstrong is someone so many
gold partisans loved to hate, but he hasn't been
convicted of anything yet, and we should remember that
the government that is prosecuting him now is the same
government that won't answer our questions about what
IT is doing with gold.

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

* * *

PROSECUTOR SAYS
ARMSTRONG HIDES VALUABLES

By Noelle Knox
AP Business Writer

December 16, 1999

NEW YORK (AP) -- U.S. prosecutors claim Martin
Armstrong, the renowned market forecaster accused of
defrauding Japanese investors, is hiding more than $16
million worth of gold bars, rare gold coins and
antiquities.

Armstrong, founder of Princeton Economics International
Ltd., was arrested in September and charged with
bilking Japanese companies out of $1 billion. His
assets have been frozen as prosecutors try to find
money to repay investors.

Prosecutors filed a motion Wednesday asking the court
to hold Armstrong in contempt for refusing to turn over
seven boxes of corporate documents and assets,
including 102 bars of gold, a $750,000 bust of Julius
Caesar, hundreds of rare coins, a bronze helmet and
other antiques.

quot;The value of the missing property is very
substantial,quot; said Marty Glenn, an attorney for
O'Melveny amp; Myers, the court-appointed receiver in the
case. quot;Given the magnitude of the losses, any dollar we
can recover is a dollar more we have to repay
creditors.quot;

Prosecutors believe Armstrong still has the valuables,
which he kept in an upstairs hallway closet of the home
in Maple Shade, N.J., where he lives with his mother
and two children, court documents say.

quot;I observed Mr. Armstrong sit for hours in the hallway
outside his bedroom studying the coins,quot; according to a
sworn statement by Tina Mustra, who was Armstrong's
executive assistant and live-in girlfriend.

She also testified that Armstrong called her on Aug.
27, a few days before FBI agents searched the offices
of Princeton Economics, and told her to put certain
corporate records in boxes and to copy certain computer
files onto disks and delete the originals.

quot;Mr. Armstrong stated that he would come by the
Carnegie Center office over the weekend and remove the
boxes,quot; Mustra said in her affidavit, adding that when
she returned to work the following Monday the boxes
were gone.

Last month prosecutors again searched Armstrong's
offices and found a sliver bar hidden in the closet of
his office and 22 coins in his desk.

Armstrong's attorney, Martin Unger, said he would fight
the contempt of court motion.

quot;I just don't think those papers show conclusively that
Martin Armstrong today has anything or control of any
of that,quot; Unger said, adding that it was unclear
whether the valuables were corporate assets and subject
to the freeze.

Armstrong has pleaded innocent to charges of fraud
brought by the Securities and Exchange Commission, the
Commodity Futures Trading Commission and the U.S.
Attorney. He is free on $5 million bail.

Armstrong, 50, owes almost $1 billion to some 100
Japanese corporate investors. His companies, including
Princeton Economics and Cresvale International Ltd. in
Tokyo, had raised money from investors and promised to
repay the debt, plus interest.

Instead of investing the money in safe bonds, as he
promised, Armstrong made risky bets on currencies and
derivatives. Today only $46 million has been recovered
to repay investors. Armstrong allegedly hid the losses,
providing bogus letters to investors that inflated the
amount of money in their accounts. At the same time, he
continued to collect performance fees for managing the
money.

Indeed, Armstrong continued to buy coins and antiques
while he racked up huge trading losses.

In March 1999, for example, Armstrong's trading losses
totaled $140 million. Yet just two months earlier he
spent $411,461 on rare coins, according to court
records.

quot;It is rather startling that when the barn is burning
down, Armstrong is out buying coins and antiquities
using corporate money,quot; said Glenn, the O'Melveny amp;
Myers attorney.