An Internet petition to clarify U.S. policy on gold


11p ET Tuesday, July 24, 2001

Dear Friend of GATA and Gold:

Given the interest in the statement by the seemingly
flummoxed counsel to the Federal Reserve that he can't
remember talking about "gold swaps" and must have been
misquoted by his own agency, you might want to read
the following exchange I had today on the bulletin
board at with that excellent Internet
site's proprietor, Michael Kosares, who is as good
an analyst of the gold market as I know and whose
commentary occasionally has been posted to you. Maybe
what follows is too much "inside baseball," but some
of gold's partisans may find it useful in understanding
GATA's operations and aspirations.

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


Exchange at between
Michael Kosares, proprietor, and Chris Powell,
secretary/treasurer, Gold Anti-Trust Action
Committee Inc., July 24, 2001

* * *

USAGOLD: This backtracking by Mr. Mattingly looks very
bad. There are some holes in this thing, Chris, which I
would like to see clarified.

As I recall, the meeting in question had present Mr.
Mattingly, Alan Greenspan and Lawrence Lindsay (then
Fed Board member, now chief economic advisor to
President Bush). As I recall, the man asking the tough
questions was Mr. Lindsay. If Mr. Greenspan was there,
why is he asking now whether or not Mattingly made the
statements in question?

I do believe if my memory serves correctly that
Greenspan reacted directly to Mr. Mattingly's
statments. As chairman of the Federal Reserve, the time
to ask such questions would have been at the time
Mattingly was talking about the "swaps," not now by
formal letter, but I do not recall any questioning. (As
a matter of fact, I do remember part of the
conversation being excised when these minutes were
supposed to be a matter of public record. That alone
justifies disovery, in my non-legal view.)

Is Greenspan attempting a bureaucratic cya or is the
whole thing an attempt to get a cover thrown over the
matter for the benefit of the American public --
particularly the benefit of gold advocates and owners?

I saw Bill Murphy's reposting of the Mattingly comment.
This statment was not made by mistake. The specificity
is a tip-off.

Question, Chris: Where did the story on the Greenspan
inquiry originate, the Mattingly camp or the Fed? And
why did they go public (in yours or Bill's opinion)?
They could have sat back and hoped the whole thing
would blow over, or that the Howe suit would not go to

Does the GATA group believe that this is a firm
indicator that the Howe suit might go to discovery?
This appears a strange turn of events from where I'm
sitting. I can't believe that Alan Greenspan actually
wrote Mattingly for a clarification and then the letter
and results actually got published.

Is it possible to provide the sequence of events --
particularly with respect to the letter exchange -- for
our readers? Does anyone in the GATA camp have an
opinion why this happened now?

I consider these events a major breakthrough.

Oh, and most importantly, who made the whole thing

* * *

CHRIS POWELL: Hi, USAGold, old friend! Thanks for your
interest in the Fed's strange response to the inquiry
made by Senator Bunning on behalf of two of his
constituents, Mr. and Mrs. Rupert Raymond of Lexington,
Ky. Let's see if I can answer your questions about it
all. If I miss something, let me know and I'll try again.

Yes, the record of the January 31, 1995, meeting of the
Federal Open Market Committee says Greenspan was
presiding. So it IS a little disingenuous of him to ask
his counsel, Mattingly, to explain what was meant about
the gold swaps at the meeting without volunteering his
OWN understanding, which is surely as complete as
Mattingly's could have been -- if poor Mattingly hadn't
come down with a convenient case of amnesia.

I don't think that anyone at the FOMC meeting reacted
directly to Mattingly's brief reference to the gold
swaps -- at least the edited minutes recently made
public and discovered by GATA show no reaction on the
gold issue. But there's no telling how the FOMC
discussion really went; the minutes are heavily
censored before their release -- five years later --
and no doubt the reference to the gold swaps made its
way into the public record only accidentally. Surely it
would be expunged if the Fed was able to do the minutes
over again.

This is how I understand the chronology here:

1) For a long time now GATA has been urging its
supporters in the United States to write to their
congressmen and ask them to get answers from the Fed
and the Treasury about the U.S. government's policy
toward gold. As we uncover more information, we revise
our questions. Indeed, part of our problem until
recently may have been that we were asking the wrong
questions, or not asking them specifically enough. For
example, we had been asking whether the Fed, Treasury,
or Exchange Stabilization Fund were "leasing" gold --
and we were told, quite officially, no. Then GATA's
Michael Bolser, assisting Reg Howe in our lawsuit
against the Fed, the Treasury, the Bank for
International Settlements, and the bullion banks,
discovered the FOMC minutes' reference to gold "swaps."
The implication here is that the U.S. government trades
gold with another party, and that OTHER party leases
the gold. While the U.S. government is effectively
sponsoring and underwriting the gold leasing, the U.S.
government can pose as not doing the leasing itself --
hence a negative answer to GATA's gold leasing question
may be technically accurate in the narrowest and most
contrived Clintonian sense, even while being misleading
and MEANT to mislead. Greenspan's knowledge of the gold
swaps well may have been the basis of his famous remark
to Congress a couple of years ago that central banks
were ready to lend gold in increasing quantities should
the price rise. Oh, not MY central bank, Greenspan
exclaimed when GATA called him on this point. His
letter to Senator Lieberman, prompted by GATA's first
round of questions, explained his gold leasing remark
as having been based on what he had "perceived" as the
policy of other central banks. Of course if the U.S.
government was essentially underwriting the gold
leasing of those other central banks, Greenspan's
"perception" would have been awfully accurate, no?

2) A couple of weeks ago GATA updated the questions it
urged people to put to Congress. We did this to
encompass the gold swaps and the reclassification of
the gold at West Point. These new questions are very
comprehensive. You can see them here:

But it seems that our Kentucky friends, the Raymonds,
wrote to Senator Bunning BEFORE these updated questions
were distributed, and this may explain in part
Greenspan's less than comprehensive response. No
matter. What we have gotten in this round of
correspondence is very interesting and revealing, and
even now we are pressing, through Congress, for answers
to the more comprehensive questions.

3) This latest correspondence from Greenspan was
disclosed in a very ordinary way. The Raymonds wrote to
Senator Bunning. Senator Bunning wrote to Greenspan.
Greenspan replied to Senator Bunning. Senator Bunning
forwarded the reply to the Raymonds. The Raymonds,
doing what we have asked all our friends to do,
promptly provided it to GATA Chairman Bill Murphy. GATA
proceeded to publicize it via email to our 1,500
supporters and via postings on the Internet --
including posting at this invaluable forum -- and an
editor at Dow Jones Newswires, who is on our mailing
list, thought it was interesting enough to merit a
story. That is, GATA is the source of the publicity

But it is very clear from Greenspan's responses (and
from Mattingly's memo, which cites the Howe lawsuit)
that the people at the Fed know GATA very well and what
we're trying to do. Indeed, I wonder if Old Mealy-Mouth
himself, supposedly a gold advocate in his youth,
wasn't giving us a sort of confirmation by providing
Senator Bunning with such an inane and inadequate and
yet revealing response. (Like most members of Congress,
Senator Bunning has no idea yet of what he has stepped
in here; he was just doing an ordinary service for some
constituents, asking government officers to answer
their wholly reasonable questions. And all of a sudden
his office gets a call from Dow Jones Newswires.)

4) Yes, Greenspan could have declined to answer the
questions from Senator Bunning. But there is a great
risk in that, especially since the same questions are
coming in from various congressmen as a result of
GATA's attempt to mobilize the grassroots gold
constituency. Refusing to respond to a congressman is a
very good way of raising suspicion and even prompting
more formal investigation. While Treasury Secretary
O'Neill has yet to respond to GATA's most recent
questions, I think time is running out for him. He will
have to answer eventually, or, perhaps just as well,
say publicly that he refuses to answer -- IF our
friends keep pressing their congressmen to follow up.
THAT is the big challenge to GATA and the gold cause
right now. Questions will be evaded or nonsensical
answers given by the Fed and the Treasury as long as
congressmen really aren't paying attention, as long as
they are only playing intermediary postmen. To bust the
gold suppression scheme, we probably will have to get a
few congressmen both to understand the issue AND to
work up the courage to press it, even though pressing
it will cross almost all the money and power in the
world. We're working on that, but it's a tall order.
For if GATA is right and U.S. economic policy for the
last five or 10 years or so has been based on the
surreptitious suppression of the gold price and a
misimpression of the strength of the dollar, then
nearly all economic decisions made by individuals and
governments throughout this time have been based on a
false premise, and the whole world is wrong
economically. Do you think very many people really want
to know this? We think that the highest officials of
the U.S. government, including certain members of
Congress, already do, and that it terrifies them.

5) But note the pattern developing here. Mattingly
can't remember and even suggests that the Fed's
elaborate stenography service misquoted him -- though
the Fed's own procedure is to give its officials
preliminary copies of meeting minutes so that they may
edit their own remarks prior to publication, something
Mattingly declined to do for six years! And asked the
other day about the gold reclassification issue by Rep.
Ron Paul at a House hearing, Secretary O'Neill lapsed
into remarks about the authority of the Exchange
Stabilization Fund to deal in gold -- which wasn't
Paul's question -- only to indicate that he did not
have the information Paul wanted. So Paul asked O'Neill
to look into the matter and reply later. All this
signifies that we are finally asking exactly the right
questions and that our questions cannot be answered
without causing tremendous problems for the government
and others.

6) While these developments are interesting, I doubt
that they will have much bearing on whether the Howe
case survives the defendants' dismissal motions and
reaches discovery. Remember, all this is taking place
outside court and beyond the court record -- unless
Howe finds some way to put it into a new brief, which
may be difficult. If the lawsuit survives dismissal and
enters discovery, we will have much fun. GATA has
believed from its first day that we could end the
suppression of gold if only we could get into discovery
in a lawsuit; we wouldn't have to win the lawsuit
itself but simply compel production of evidence and
publicize it. But we can't count on this; we have to
pursue the truth about U.S. government policy toward
gold any way we can. The lawsuit is wonderful but it
well may fail, even as congressional inquiry may

7) Why is this stuff happening now? Because GATA is
always trying to do SOMETHING to shake things up. Some
things work and some don't. The congressional approach
has worked before for us, and with this latest letter
from Greenspan and the Mattingly memo, it worked again.

8) Just imagine how much information might be shaken
loose if the whole gold world rose up to get the
attention of Congress. The World Gold Council alone has
an annual budget of $50 million or so and could get to
the bottom of the gold suppression scheme in a few
weeks by spending 1 percent of that on legal and
political representation in Washington. One or two
major U.S. mining companies could accomplish the same
thing. Instead the WGC does jewelry commercials and the
mining companies bury their heads in the sand and they
all leave gold's real work to a few amateurs begging
little contributions from ordinary people who already
have lost their shirts in the gold market and gold
shares. Why is the industry so unhelpful? Probably
because the big companies that run the WGC are privy to
the price-suppression scheme and hope to clean up in it
by driving the smaller and the unhedged mining
companies into bankruptcy or into acquisitions at
distress prices. Barrick already has swallowed
Homestake. Will AngloGold get hold of Gold Fields? And
so on.

9) Well, we at GATA do what we can with what we have.
Sometimes we strike out. On our worst day we still do
more for this cause than anyone else -- if I do say so
myself! But the key right now is to make everyone with
an interest in gold understand that HE is the key to
our success -- that ALL of us can do something crucial
by spending an hour or so to write to our congressmen
and ask them to get answers to our questions, and then
follow up and follow up and follow up. The same thing
can be done by our friends in South Africa and
Australia and other gold-mining regions with their own
governments. This is simple democracy. Cynics can sneer
at it all they want because of the power we're up
against, but this is actually how the world works. Good
causes almost always start small. A few people get
together and resolve to act rather than despair. Thus
are revolutions made.

William James wrote that "the eternal forces of truth
... always work in the individual and immediately
unsuccessful way, underdogs always, till history comes
and puts them on top." Well, with a little more help,
history just may be coming to gold. If so, then "fiat
iustitia et ruant coeli" -- Let justice be done though
the heavens fall.