Anatomy of a budding gold rally: Gold stocks outpace overall stock market


By Bill Murphy, Chairman
Gold Anti-Trust Action Committee Inc.
January 13, 2002

Last weekend I left for Washington to attend
Ralph Nader's conference, "The Federal
Reserve: Myth Versus Reality," at the
National Press Club. My purpose was to make
some contacts to bring attention to the
manipulation of the gold market.

Sunday was a hoot, as I had dinner with my
old quarterback from my football-playing
days, the legendary King Corcoran. He still
has the same rap he had 30 years ago. What a

There is no reason to review everything the
impressive group of speakers had to say about
the Fed. I thought it would be better to go
over the highlights directly related to GATA.

Just prior to the conference, I bumped into
Walter Charlton, one of the speakers and a
lawyer for plaintiffs in a class-action
discrimination suit against the Federal
Reserve Board. It was a most animated
conversation, as you might imagine. The
plaintiffs are suing the Fed for racial
discrimination. Until this lawsuit was
brought, not one black or minority person was
ever promoted to the supervisor level
throughout the entire Fed system.

Charlton brought with him one of the
plaintiffs, whose remarks at the conference
were broadcast by C-SPAN2. Wouldn't you know
it: The speaker was Fed General Counsel
Virgil Mattingly's personal assistant for
12 1/2 years. Mattingly wrote the memo to Fed
Chairman Alan Greenspan alleging that his
comment about gold swaps at the Federal Open
Market Committee meeting in January 1995 was
garbled or misunderstood in transcription.

Charlton has a great sense of humor and got
me laughing. What struck me most was his
recounting how the Fed just lies, lies, and
lies again. He also mentioned that accounting
firm Arthur Andersen's relationship to the
government is a bit too close when it comes
to "up and up" reporting.

Boy, is the world finding that out.

Nader led off the conference, which was more
sparsely attended than I expected, but that
was counteracted by the fact that it was
televised all over the United States. I had
to chuckle a bit as Nader commented that he
was perturbed that the mainstream press
refused to give the conference more

Nader was most impressive. He is always
thinking or writing. Speaking with him is not
the easiest, as you get the impression he is
already thinking of what else has to be done.
Whether you like him or not, he is a courageous,
lonely voice in Washington, willing to take on
the establishment.

Professor Auerbach of the University of Texas
spoke about the Fed's shredding documents and
his Barron's article. GATA's discoveries
about the Fed seemed a natural tie-in, which
is one of the main reasons I went to
Washington. I might as well have been "a man
on the moon" as far as the professor was
concerned. What a Casper Milquetoast! When I
phoned Auerbach in Texas, he said he would
meet me in Washington. In Washington he
proceeded to tell me to send what I had to
Texas. He could not run away from me fast
enough. God forbid that his wonderful
discovery should be associated with people
without pedigrees, or who want to really take
on the establishment.

One of the most likeable speakers was Jim
McTague, Washington editor of Barron's. Years
ago he made the mistake of writing a critical
commentary on the Fed, and he has been
shunned by Greenspan ever since. That is no
way to make the "A Team" party list, as he
put it.

McTague went on to say that under the present
"war" scenario, the press would be more
lenient on the Fed than in normal times.

McTague is now well aware of GATA and what we
have found. He is a man of obvious integrity.
Let us hope, after this Enron mess, that he
assigns a staff reporter to present GATA's
findings and the Reg Howe lawsuit to the
investment world.

James Galbraith, also a professor at the
University of Texas and son of the famed
economist, gave the luncheon speech, while
noted author William Greider chided the Fed
in the morning, but he left before I could
talk to him.

The rest of the speakers were good, but of no
great shakes to the GATA world.

There were some other fun points:

* A GATA supporter e-mailed GATA' Secretary-
Treasurer Chris Powell as the conference
began to let him know that C-SPAN was
televising the conference, and so Chris
quickly notified everyone on the GATA e-mail
list, and a good number of GATA supporters
caught part of the conference, including a
question of mine to McTague.

* Money manager, newsletter writer, and GATA
supporter Adrian Day was there and we had a
good chat over lunch.

* member and GATA
supporter Gill Gerard came all the way from
Chicago to attend. I certainly enjoyed
meeting him.

* The big surprise was my meeting last
Tuesday with U.S. Rep. Ron Paul's legislative
director. Paul is preparing a bill for
Congress (to be submitted in only a few
weeks) to require that the U.S. Treasury
Department's Exchange Stabilization Fund
account for its gold operations. Paul's
legislative director had already received
James Turk's latest expose of the ESF,
"Acccounting for the ESF's Gold
Swaps," which James had published only a
few days earlier. This is BIG news as far
as the gold world is concerned.

The No. 1 item on the Gold Cartel's agenda
has been to keep their nefarious activities
unknown to the investment and political
communities. They are like Dracula in the
sense that they cannot stand any kind of
spotlight. That is how they succeeded all
these years -- until GATA came along.

A good example is the International Monetary
Fund The IMF wrote to GATA consultant Andrew
Hepburn that it does not ask its member
central banks to account for gold that is
swapped out of the banks as still part of the
bank's official gold reserves. Wrong! Lie!
The European Central Bank and the central
banks of Portugal and Finland wrote to
Hepburn that the IMF does indeed ask that
they report swapped gold as part of their
official reserves. That was an unknown to the
gold world until Hepburn put a spotlight on
the IMF.

That is most important, as the Gold Cartel
has been deceiving the investment world for
many years about the amount of gold that is
no longer under central bank control. They
are hiding that the gold loans/swaps are two
to three times greater than reported, and
that there is now an extraordinary threat to
their massive short positions.

Now, fast-forward two to three weeks. A brave
U.S. representative, in the spirit of Thomas
Jefferson, is going to matter-of-factly
present a bill directing that if the ESF is
going to sell U.S. gold, or deal it out via
loans and swaps, it must get congressional
approval first.

The evidence presented by GATA that the ESF
is manipulating the gold market is so
compelling that a congressman is going to
request that the ESF account for its
operations. It is not a question of
"are you doing it?" The bill is being
structured as if the ESF operations are a
settled facts.

I would think a few bells and whistles are
going off right now in the minds of the many
hundreds of you who have obtained through
members of Congress letters in which U.S.
Treasury Department officials deny that the
ESF is dealing in gold. They go so far to say
the ESF has not dealt in gold since 1978.

Something is going to have to give here.
There is no "gray" after this bill is

The ESF and U.S. Treasury cannot be partly
pregnant. They have been messing around in
the gold market, or they have not. They have
been telling the truth to Congress, or they
have not. Americans have a right to know if
their gold is being sold out from under them
without the knowledge of their elected
representatives. I would think most members
of Congress would feel the same way.

The bill is being crafted right now and
Paul's staff has GATA and our findings at
their service.

The timing could not be better after all the
Enron disclosures. It is time that Treasury
Secretary O'Neill comes clean about the ESF
and the gold market. Only he and the
president can offer official explanations for
ESF gold operations. And that will be the
beauty of this bill. It will help GATA get
the attention of the press to ask Treasury
Secretary O'Neill to answer a few simple
questions about U.S. involvement regarding
the manipulation of the gold price.

There is so much GATA can do with this bill
and we will be ready to act as soon as the
bill is proposed in Congress -- all in the
name of asking for clarity and the truth. Who
could be against that?

The Gold Cartel, that is who. They are the
same sort of people as the Enron crowd that
hid the truth from the Enron employees and
the investment world.

The one thing these Draculas cannot survive
is a light being shown on their crooked
maneuvers. After this bill is proposed,
the GATA Army will be more easily able to
take our evidence of ESF gold dealing to the
world press. We will be able to show that all
their denials have been part of a cover-up of
gold operations by certain bullion banks, the
Fed, and the U.S. Treasury. As the Enron
scandal unfolds, the mainstream press will
have a harder suppressing the evidence GATA
has of gold market manipulation -- a
manipulation that has hurt many millions more
people around the world than the Enron

People like Norman Hauptman, for example, who
sent Chris Powell and me the following note:

"I am a retired firefighter from the City of
New Rochelle in New York. I have my life
savings in gold mining stocks. Since
firefighters are in the public eye, do you
feel we could generate helpful publicity for
our cause by creatively using my status to
generate sympathy for me, and by extension
all the others?"

Yes, Norman, I do. The Gold Cartel has made
billions in its nefarious dealings, violating
American law and free markets and fair play,
while leaving you and so many others in the
lurch. They are no different than certain
Enron executives, Arthur Andersen, and all
those in the Wall Street and Washington
communities that extended favors to Enron so
that it could deal as it wished in the
derivative markets.

Enron is being found out for what it was: a
fraud. It is time that the Gold Cartel be
found out too.

Get ready. Soon the investment world will
find out Dracula lives in the form of the
Gold Cartel. Soon an intense light is going
to be pointed directly at this evil creature.
It is the one thing these Draculas cannot
stand: a light on the truth. As the light
hits them, their scam will be revealed to the
world. Their days are numbered.