New details on gold price manipulation in New York


2:47a ET Saturday, February 24, 2001

Dear Friend of GATA and Gold:

GATA made it into Friday's Wall Street Journal. The
article, written by Neil Behrmann, who also writes for, is below. Can the end of the
suppression of the gold price be far behind?

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

* * *

World Gold Council Hopes to End
Gold Price's 20-Year Bear Market

By Neil Behrmann
Special to The Wall Street Journal
Friday, February 23, 2001

LONDON -- The golden bear is just over 20 years old.
The big question is whether it will celebrate a 21st

Trading at $257 (283 euros) an ounce, gold is
languishing near its 20-year low of $252.80, reached in
July 1999, and is 70% below its January 1980 all-time
peak of $850.

"Despite intermittent short rallies, the bullion and
gold-stock slump just goes on and on," says Jon
Bergtheil, head of global mining at HSBC Securities.
Most fund managers today can't even imagine the 1970s,
when gold soared and was fashionable, he says. The past
five years in particular were a terrible period for
gold stocks, he says.

In February 1996, gold was at $415 an ounce. Since
then, HSBC's index of gold stocks plunged 73% to 44
points. Illustrating this golden horror story, leading
North American gold stocks Barrick Gold Corp., Placer
Dome Inc., and Newmont Gold Co. tumbled between 50 and
75 percent from their peaks in 1996 until Feb. 19. In
the same period, South African and Australian leaders
AngloGold Ltd., Gold Fields Ltd., and Normandy Poseidon
Ltd. slumped between 70 and 80 percent. By contrast,
the surging platinum and palladium quotes created an
investment bonanza for stockholders in Anglo American
Platinum Ltd. and other platinum stocks, he says.

"Interest in the gold-mining sector is virtually zero
and fund managers resent us if we recommend the
stocks," Mr. Bergtheil says. It is tempting to be
contrary and advise purchases, but investors who were
tempted into that strategy in the past few years, lost
heavily, he says.

In an attempt to lift gold out of its lethargy, the
World Gold Council, a producer marketing and lobby
organization, persuaded members to raise their
membership fee to $2 an ounce from $1. "The result is
that we will spend $32 million this year on marketing
gold compared with only $14 million in 2000," says Kerr
Cruikshanks, the council's marketing director.

The council is also following the lead of diamond
corporation De Beers Centenary AG and is employing
Wolff Olins Ltd. in London to advise on branding gold;
Bartle Bogle Hegarty, an advertising firm, will propose
a global promotion campaign.

To be sure, gold's relatively cheap price is already
contributing to an increase in jewelry demand, which
rose 4 percent to a new record of 2,902 metric tons,
says Jill Leyland, economics manager at the Council.
But investors continue to shun the metal despite shaky
global stock markets, concerns about the dollar and
Middle Eastern political turmoil, she says.

Gold is weak because there's more than sufficient
supply to match demand, says John Reade, senior
precious metals analyst at UBS Warburg. The shrinking
band of gold enthusiasts claim that gold should be a
lot higher because gold jewelry, electronics, other
industrial demand and hoarding by emerging nations is
well in excess of global mine production of 2,609
metric tons, he says. But they are forgetting other
sources of supply, Mr. Reade says. Whenever the price
rallies, central banks and disenchanted investors tend
to sell and put a lid on quotes, he says, estimating
that private investor global gold stockpiles amount to
25,000 metric tons, while central banks control 33,000
metric tons.

In recent weeks, hedge and commodity funds were selling
gold short, aiming to profit by repurchasing the metal
at a lower price, dealers say. Mr. Reade of UBS Warburg
estimates that the outstanding short, or bear, position
on Comex in New York is 218 metric tons. This is the
highest level since the summer of 1999, prior to a
considerable rally, he says.

Such a rally could occur if the dollar weakened, says
Frederick Pannizutti, head of strategy at MKS Finance
SA. But if the dollar remains strong, gold could
weaken, he says.

Meanwhile, Reginald H. Howe, a member of the Gold Anti-
Trust Action Committee Inc., a gold bug pressure group,
filed a complaint in the U.S. District Court for the
District of Massachusetts against the Bank for
International Settlements; Alan Greenspan, chairman of
the Federal Reserve Board; Lawrence H. Summers, former
Secretary of the Treasury; J.P. Morgan & Co.; Chase
Manhattan Corp.; Citigroup Inc.; Goldman Sachs Group
Inc.; and Deutsche Bank AG.

The complaint "for damages and injunctive relief"
alleges "manipulative activities in the gold market" by
central banks and bullion banks to depress the gold
price from 1994 to the present.

The complaint is due to be heard next month, but the
World Gold Council and several major gold producers
distance themselves from the allegations.

"We've thoroughly researched the allegations and don't
find any evidence of manipulation in both the gold and
gold derivatives market," said Ms. Leyland and Mr.
Cruikshanks of the Council.