''Midas'' commentary for January 26, 2002


12:28a ET Sunday, January 27, 2002

Dear Friend of GATA and Gold:

We've prepared a summary of GATA's work for
distribution to news organizations, political
leaders, and anyone else who is new to the
issue of the suppression of the gold price.
It's appended here for your use and may be
updated from time to time.

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

* * *

-- A SUMMARY, JANUARY 27, 2002 --

In 1998, as he began www.LeMetropoleCafe.com,
his Internet site of financial commentary,
Bill Murphy noticed that the gold market
wasn't trading as normal markets do.
Eventually he sensed collusion among market
participants to suppress the gold price and
wrote about it repeatedly.

Following Murphy's commentary with great
interest, a newspaper editor in Connecticut,
Chris Powell, noted that collusion to control
prices is against U.S. anti-trust law and
suggested that gold partisans and gold market
participants mobilize against it, and so GATA
was formed and incorporated in early 1999.
Murphy is chairman, and Powell is
secretary/treasurer. GATA is recognized by
the U.S. Internal Revenue Service as a tax-
exempt charitable, educational, and civil
rights organization. It has received
contributions from mining industry sources as
well as hundreds of individuals with an
investment or philosophical interest in gold.

GATA has advocated litigation against
collusion to suppress the gold price, and,
indeed, has helped bring such litigation in
U.S. District Court in Boston, with its
consultant Reginald H. Howe. But GATA has
discovered that the gold-price suppression
scheme involves not only big bullion trading
banks but also governments and particularly
the U.S. government.

Indeed, GATA has discovered that the gold-
price suppression scheme was actually put
down on paper, in public, by Harvard
Professor Lawrence Summers, just before he
went into the Clinton Treasury Department,
eventually becoming treasury secretary. (He's
now president of Harvard.)

Summers co-wrote an essay for an academic
journal examining the inverse relationship
between the gold price and interest rates,
and more or less concluded that government
could keep interest rates low by suppressing
the gold price. While there is no electronic
copy of Summers' essay, you can read about it


The mechanisms by which the gold price is
being suppressed are, first, "leasing" of
gold by central banks, wherein government
gold reserves are sold into the market
through intermediaries; and, second, the sale
of gold futures, options, and other
derivatives by bullion banks that, GATA
believes, have assurance from governments
that, if they ever have to produce actual
gold to cover their positions, it will be
made available to them cheaply from official

Gold leasing is a matter of public record
among the European central banks and some
others. The United States, which reports the
biggest gold reserves in the world, has
always denied participating in gold leasing.
But GATA have information that comes close to
proving such involvement, undertaken through
the secretive and unaccountable Exchange
Stabilization Fund of the Treasury
Department. Surreptitiously issuing claims
against U.S. gold reserves, the ESF and the
Federal Reserve Board have put those reserves
at risk and their true ownership is now in

One big piece of evidence of the
surreptitious use of U.S. gold reserves to
suppress the gold price is a statement by the
Federal Reserve's general counsel, Virgil
Mattingly, recorded in the minutes of the
Federal Open Market Committee meeting of
January 31, 1995, which you can read about


Evidence of an auditing sort can be found in
some essays by GATA James Turk, editor of the
Freemarket Gold and Money Report, which you
can read here:



For a broad perspective on the legal
implications of all this, you can read the
full complaint in the GATA-supported lawsuit,
Howe vs. Bank for International Settlements,
et al., here:


The lawsuit notes that the market in gold
derivatives is tightly concentrated and
overwhelmingly dominated by the J.P.
Morgan/Chase investment bank. Of course the
House of Morgan has a long and intimate
relationship with the U.S. government. This
concentration in the market for gold
derivatives is in itself, GATA thinks, close
to proof that the gold market is manipulated
and not trading freely. This view is
increasingly held by gold market observers.

A report on the one hearing held so far in
the GATA lawsuit can be read here:


What are the purposes of the gold price
suppression scheme?

We believe there are several:

1) To keep interest rates down by deceiving
the bond markets about the rate of inflation,
inflation historically being gauged in large
part by the price of gold. You may remember
the famous comments about the bond market
that were attributed to President Clinton not
long after he took office. He was frustrated
with having to take the advice of his
economic advisers that the approval of the
bond market was crucial to his
administration's political success. Clinton
said he resented having to make his
administration one of "Eisenhower
Republicans." GATA thinks that the gold price
suppression scheme -- the massive deception
of the bond market -- was Clinton's revenge.

2) To strengthen the U.S. dollar in relation
to other curencies; to suppress commodity
prices generally, since commodity prices take
their cues from the gold price; and, by
extension, to raise living standards in the
United States by expropriating the developing
world, which makes its living largely from
producing commodities.

3) To enrich through inside information about
U.S. government policy the Wall Street
investment houses that have helped implement
the gold price suppression scheme and that
long have staffed the Treasury Department and
Federal Reserve.

But the results of the gold price suppression
scheme have been far greater than all this.
The results include the devastation of the
economies of the developing world, and
particularly sub-Sarahan Africa, and the vast
misallocation of capital throughout the world
in the last decade. That is, with the bond
market deceived about inflation, the dollar,
and the strength of the U.S. economy, most
economic decisions around the world for the
last decade have been based on horribly
mistaken premises. The U.S. stock market
bubble, now bursting, is evidence of this.

There's a lot more detail to be had here, but
this is a start. All GATA's dispatches to its
supporters, wherein GATA's evidence and
commentary are laid out, are available here:


GATA believes that the most important work to
be done now is to compel the U.S. government
to admit and explain its intervention in the
gold market -- its secret underwriting of the
gold leasing done by central banks around the
world and its putting U.S. gold reserves at
risk. This is, after all, PUBLIC policy
undertaken with PUBLIC resources, and there
can be no justification for surreptitious
government intervention in a supposedly
capitalist economy in a democracy. Everyone
should have equal access to information about
such policy.

GATA believes that the gold price suppression
policy will end when it is exposed, because
it can't stand the light of day and because
no investors will take the other side of any
trade they come to realize is fixed.

Please contact us for more information.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
7 Villa Louisa Road
Manchester, CT 06043-7541

E-mail: GATAComm@aol.com