Committee for Monetary Research and Education dinner April 4

Section:

12:53p ET Tuesday, March 6, 2001

Dear Friend of GATA and Gold:

Gordon H.S. Bamford, a member of South Africans
for a Free Gold Market, GATA's affiliate in
that country, has written a masterful open letter
to U.S. Treasury Secretary Paul O'Neill. Gordon
has shown us all how this work is to be done. We
hope that many others in South Africa and around
the world follow his example.

We also hope that South Africans will bring
Gordon's letter to the attention of their
government and urge their government to press
the issue diplomatically with the United States.

Gordon's letter appears below.

Make yourself heard on the gold price manipulation
issue -- to your government, your local news media,
and to the U.S. government.

Thank you so much, Gordon.

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

* * *

March 3, 2001

Mr. Paul O'Neill
Secretary, U.S. Treasury Department
1500 Pennsylvania Avenue NW
Washington DC 20220
United States of America

Dear Mr. Secretary:

In August 1949 I joined the South African gold miing Industry,
retiring in 1987 after almost 40 ears of service with a major mning
finance house, Johannesburg Consolidated Investment Co. Ltd. (JCI).
During my last nine years there, from 1978-1987, I was responsible
for the entire operation of three deep-level gold mines. When I
retired, the companies employed some 41,500 people.

Since my retirement JCI was unbundled by its principal shareholder,
Anglo American Corp. The JCI gold division was dismembered and sold
off, partially to a new generation of low-grade, low-cost gold
producers, and partially to a consortium controlled by Canadian
interests.

During the past 10 years the U.S. dollar gold price was
first "contained" below a $420 ceiling, then locked into a relentless
downtrend, settling in a narrow band between $260 and $285 per ounce.
Under the twin pressures of a falling gold price and a relatively
high level of local inflation - as a new South African
government battled to address the hopes of recently enfranchised
voters - the gold mining industry was forced to retrench much of its
labour force in order to stay afloat.

The mines once under my control reduced their numbers by 40 percent.
A conservative estimate of these job losses during the preceding 10
years is given as 150,000 to 200,000. To this number must be added
extended family dependents of not less than 1.5 million souls living
in remote rural areas with very little or no income.

In addition, many engineering and supply companies dependent on gold
mines have gone belly up.

The fate of some of these unfortunate individuals and their families
can be seen on the streets of our cities and towns, begging for
assistance or by selling cheap goods that no one wants. Some have
even taken to a life of petty crime to keep body and soul together.

In contrast to this tale of woe amongst producers, demand for gold
has risen every year, and the gap between mine supply and total
offtake has continued to widen. Despite this apparent contradiction,
the price of the metal failed to recover. Indeed, it fell.

I and many of my former colleagues - most of whom persisted over
the years to hold faith with gold as a long-term investment - have
finally been forced to conclude that the prices has been and is being
held down artificially. We argue that free markets respond
differently to the elements of supply and demand.

Mr. Secretary, you have come out of the aluminum industry. If the
price of that metal behaved the same way, you'd have wanted to
know why. You would understandably have felt aggrieved if there had
been covert efforts to suppress the price artificially - efforts
that ended up harming the interests of your industry. We in South
Africa feel the same way.

Since 1994 it has been remarked upon that whenever the price of gold
threatened to recover, a much-publicised sale of many tons of gold
was announced by one or another banking institution. Given the
regularly declared intention of your predecessors at the U.S.
Treasury to maintain dollar strength - seemingly whatever the
cost and by whatever means - you will forgive us for developing
considerable suspicion that a deliberate and co-ordinated effort to
suppress the price of gold has formed a key part of that strategy.
Running parallel with this gold strategy there also appears to have
been a simultaneous watch on share markets to intervene whenever they
threatened to fall. Financial commentators have called this the
Treasury's "Plunge Protection Team." Many have suggested that your
recently appointed assistant, Peter Fisher, lately of the Federal
Reserve Bank of New York, has played an important role in these
activities - certainly since the collapse of Long-Term Capital
Management in 1998.

You, Mr. Secretary, have gone on record as stating that you do not
favour government intervention in free markets - whether it be
the International Monetary Fund supporting countries, the Fed bailing
out LTCM, or bullion banks and the Treasury suppressing gold. We are
therefore concerned to see you bring in Mr. Fisher, for whom
intervention apparently has been second nature.

Those of us hoping that the new U.S. administration would lead the
world back to policies and actions based on principle and integrity
are relying on you to bring to light what had been done in the dark.
At the very least we have been hoping you would put a stop to it
- not bring in people who have been part of the problem.

Much has been written in recent years about the escalating oil price,
instability in the Middle East, political turmoil, trade deficits,
debt crises - and other serious issues such as political
immortality and corruption. In the past, any one of these factors
would have influenced the price of gold. Witness what happened when
oil boomed in 1980 and again in 1990. Now we have all these adverse
elements spiking together. Yet gold reacts adversely.

Accordingly, there is a strong belief among many clear-thinking
people that the gold price is being manipulated, held down by the
defendants cited in a summons filed in U.S. District Court in Boston
on December 7, 2000, by Reginald H. Howe. In his allegations Mr. Howe
makes the point that the price of gold was fixed at precisely $289/oz
for the three years ending 1997, 1998, and 1999. This was too much of
a coincidence to be the result of a market trading freely.

Recently I attended a meeting in South Africa at a small town in the
Western Cape called Franschhoek. Bill Murphy, chairman of the Gold
Anti-Trust Action Committee Inc. (GATA), was present. After lengthy
discussion those of us at the meeting formed South Africans for a
Free Gold Market and contributed to a full-page advertisement in the
country's leading financial daily newspaper. It was published on
the second day of a three-day mining conference in Cape Town. The
advertisement was headlined "Gold Price Manipulation," and it
appeared over Mr. Murphy's signature and that of South Africans
for a Free Gold Market.

On the day the advertisement was published, more than a hundred men,
many of them prominent Capetonians, met at a breakfast fellowship and
were briefed about the gold market by Messrs. Murphy and Howe. In his
address Mr. Howe outlined his case against the gold cartel.

I came away convinced that there is overwhelming evidence of
collusion between the defendants in the Howe lawsuit. Given a free
international gold market, thousands of jobless South Africans and
people of other gold-producing countries in Africa would have an
oppurtunity to live in dignity and in societies less prone to crime.
As your department is one of the defendants in the Howe lawsuit, we
urge you to choose the course of transparency and free markets. We
therefore appeal to you to help us to free the gold market from
government intervention.

Yours sincerely,

GORDON H.S. BAMFORD
South Africans for a Free Gold Market
Robertson, South Africa
Geentee@mweb.co.za