Tracking the gold suppression scheme to the International Monetary Fund


7:53p ET Monday, October 8, 2001

Dear Friend of GATA and Gold:

Here is the transcript of Friday's CNBC interview with
John Hathaway of the Tocqueville Gold Fund, along with
some clarification provided to GATA by Hathaway today
in response to complaints that he didn't raise the price
manipulation issue enough. We're lucky to have his

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

* * *

Interview with John C. Hathaway of the Tocqueville Gold
Fund on CNBC's "Street Signs" with Ted David, October
6, 2001.

Ted David: Gold has been in a steady up-trend since
last month's attack -- up more than 9 percent. Will the
commodity continue to climb as investors seek solid
ways to make money? Joining us to share his "Street
Smarts" on gold and gold stocks is John Hathaway. He is
senior portfolio manager of the Tocqueville Gold Fund.
Good to see you, sir.

John Hathaway: Hi, Ted.

David: What's the climate been for gold this year,
prior to Sept. 11?

Hathaway: It was already one of the top-performing
groups in terms of the XAU, the Philadelphia index of
gold and silver stocks.

David: How much of the bullish scenario is a result,
however, of the Sept. 11 attacks since then? Perhaps
is there something else going on as well?

[Graphic: "Tocqueville Gold Fund: Ticker, TGLDX; YTD,
up 13 percent; one year, up 20 percent; three years, up
3.5 percent."]

[Graphic: "Tocqueville Gold Fund Top Holdings: Agnico-
Eagle (AEM); Homestake (HM); Meridian Gold (MDG); Apex
Silver (SIL)."]

Hathaway: I think there's a lot more going on than
that. Though you'd have to say that that was a
positive, the fact that you have systemic risk as a
possibility is certainly something people hadn't
thought of before the 11th. But you have record growth
in money. You have the likelihood of deficit spending
returning. You've got negative real interest rates and
a very steeply sloped yield curve. All of those things
are friendly to gold.

David: We're looking at the XAU, which is up another
1.20 today at 57.71. We go back to a year ago and we
were down to around 46 or so. We talked so much about
central bank selling early on when the gold market
appeared to be depressed. What happened to all of that?

Hathaway: They're still selling. They're selling about
400, maybe 500 tons a year. But in the context of world
financial flows, it's a small number. It seemed like a
lot when the price of gold was going down. But if only
a small amount of world financial assets divert into
gold, it's potentially very explosive, and the central
bank stance doesn't really matter.

David: Let's talk about a topic that's near and dear to
a number of viewers' hearts. They talk about it all the
time -- about the manipulation of the gold market. Does
it exist? And if it does, how pervasive is it? What's
the answer here, so an investor can feel safe about
going into a market that he or she feels is fairly

Hathaway: It wouldn't be surprising if the government
were doing something, because they intervene in
currency markets. Gold is really a form of a currency,
so I don't think we should be surprised if they were
doing some things, though there's really no hard proof.
I'd say there's a fair amount of smoke. But again, I
would give you the same answer that I gave on the
central banks, and that is if money wants to flow in to
this sector, there's really nothing that the government
can do about it. The financial flows are just too

David: What about people shorting the market with
impunity, knowing that they can always buy it back,
that the banks will sell it to them?

Hathaway: I think that's a big trap. Part of a big move
in gold is likely to be a short squeeze. There are
approximately 5,000 tons that are short against
official reserves of 33,000 tons. There's really not a
lot of liquidity out there if the shorts want to cover
very quickly.

David: How much do you recommend any one investor
commit to gold; either physical gold or, I assume,
given your fund, you're talking equities here?

Hathaway: In our fund it's equities. In our private
accounts at Tocqueville we have approximately a 5
percent weighting. That used to be the norm in the
1970s. Of course for the last 20 years nobody has even
thought about it. But I would say 5 percent is probably
a good number.

David: Fair enough. Let's take a look at your gold
picks quickly here. Gold Fields of South Africa?

Hathaway: It's probably the highest quality, best-
leveraged play to the gold price. It's a very strong
company with no debt, trades at a very low valuation,
and has good assets and good management.

David: And Harmony?

Hathaway: Harmony is the aggregator in the business.
They're buying up marginal properties. They also have
good management. It's also unleveraged and very cheap
on a price-to-earnings basis.

David: And finally let's look at Newmont. What's the
rationality here?

Hathaway: Newmont is a little bit different. They have
quality assets but their balance sheet isn't as strong
as the first two, so their finances have been a little
bit of an issue. But a move higher in gold prices would
be very beneficial to their cash flows, and it also has
leverage to the gold price.

David: Mr. Hathaway, thanks for joining us today.

Hathaway: Thank you.

David: John Hathaway, senior portfolio manager of the
Tocqueville Gold Fund.

* * *

October 8, 2001

To GATA supporters:

In my Oct. 6 interview on CNBC, I mispoke when I said
there was "no hard proof" of U.S. government
manipulation of the gold price, even if I did say that
it wouldn't be surprising if the government was
intervening in the gold market and that there was "a
fair amount of smoke" to this effect.

My stance since I wrote my Aug. 23 essay, "Gold As
Theater," is that there is a growing body of evidence
to support GATA's allegations and that the questions
being raised by GATA deserve answers.

I agreed to appear on CNBC on behalf of the Tocqueville
Gold Fund. The question on manipulation caught me off
guard and I did not respond as I would have wished.
Unfortunately, in a short interview, and given the
format where I was at a different location than the
interviewer, there is no chance for amplification or

But I expect to be doing more of this kind of thing.
Next time I will speak more clearly on the subject.

John C. Hathaway
Tocqueville Gold Fund


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