Belgian Financial Times and CNBC Europe acknowledge GATA''s work


8p ET Wednesday, September 4, 2002

Dear Friend of GATA and Gold:

J.P. MorganChase has replied to letters from
GATA questioning the firm's accounting for
its exposure to derivatives. The reply,
signed by John Borden, senior vice president
for investor relations, says that "one of
JPMorganChase's goals is to be a leader in
financial disclosure," so GATA hopes to
provide the firm soon with a few opportunities
for disclosure of interest to free and
transparent markets.

The MorganChase letter, addressed to GATA
Chairman Bill Murphy and GATA consultant
Michael Bolser, is appended here.

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

* * *

August 28, 2002

This is in response to your letters dated
Aug. 5, 2002, and Aug. 4, 2002, respectively,
in which Mr. Bolser alleged that J.P. Morgan
Chase & Co. (the "company") shows "the Office
of the Comptroller of the Currency one set of
derivative books and associated risks while
showing their shareholders another."

JPMorgan Chase Bank, a wholly-owned
subsidiary of the company, is a New York
State bank and , as such, reports its
derivative exposure to the Board of Governors
of the Federal Reserve System (the "Federal
Reserve Board") on a quarterly basis. The
notional amount of its derivatives exposure
is reported to the Federal Reserve Board on
Schedule RC-R, memorandum line 2C. As you
noted, the notional amount of the bank's
derivatives exposure at March 31, 2002, was
$45,234 billion. In the same filing we
reported our total derivatives exposure at
$23, 212 trillion.

In our filings with the Securities and
Exchange Commission (SEC) the company noted
(at Page 51 of our 2001 annual report) that
we had, at Dec. 31, 2001, approximately $24
trillion in notional principal amount of
derivative and foreign exchange exposures. We
do not update that number every quarter.
However, we do report every quarter in our
filings with the SEC the mark-to-market
exposure of the company's total derivative
and foreign exchange portfolio, after taking
into consideration the benefit of legally
enforceable master netting agreements. As we
stated in our 2001 annual report, the company
believes the $24 trillion of notional
principal amount of derivative and foreign
exchange exposure "does not represent a proxy
for, and significantly exceeds the possible
credit losses that could arise from, such
transactions." We explain in the 2001 Annual
Report that:

"In terms of credit risk outstanding
exposure, the true message of risk from
derivatives and foreign exchange contracts is
the mark-to-market value of the contracts at
a point in time (i.e., the cost to replace
the contacts at the current market rates
should the counterparty default prior to the
settlement date). For most derivative
transactions, the notional principal amount
does not change hands; it is simply an amount
that is used as a reference upon which to
calculate payments. While notional principal
is the most commonly used volume measure in
the derivatives and foreign exchange markets,
it is not a measure of credit risk." (Page

After giving effect to the legally
enforceable master netting agreements, the
company's mark-to-market exposure in its
derivatives and foreign exchange portfolio
was $71 billion at Dec. 31, 2001, and $63
billion at March 31, 2002.

There is no "alchemy" (to use Mr. Bolser's
word) in the numbers we report. The
information we provide to the Federal Reserve
Board is (a) public information (as you both
know since you were able to access that
information) and (b) the gross notional
amount of the derivatives contracts, as the
schedule on which the information is reported
is used to assign a regulatory capital to
these assets. The information we provide to
our shareholders in the reports we file with
the SEC is a net number intended to give our
shareholders meaningful disclosure about,
among other things, the risks associated with
the company's business and the transactions
we enter into with others.

The company believes it has adequately
disclosed the risks associated with being a
counterparty in the derivatives and foreign-
exchange markets. (In addition to providing
the credit exposure amount related to these
contracts, the company also discloses the
maturity profile and credit rating risk
profile of its derivative and foreign
exchange portfolio. Further, the company also
reports in its SEC filings the market risks
associated with its trading activities, by
disclosing the value-at-risk associated with
its trading portfolio, the largest potential
losses in the trading portfolio produced by
the company's stress test scenarios, and a
histogram depicting the number of days on
which the company's market-related revenues
fell within particular ranges.)

The company believes that there is nothing
materially different about risks associated
with its gold derivatives contracts than
those associated with other commodities
derivatives contracts that would merit
separate disclosure in its SEC filings about
its gold derivatives portfolio.

Please be assured that one of JPMorgan
Chase's goals is to be a leader in financial
disclosure. We hope this letter answers your
questions about our various disclosures.

Very truly yours,

Senior Vice President / Investor Relations



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Centennial Precious Metals
3033 East 1st Ave.
Suite 403
Denver, Colorado 80206
Michael Kosares, Proprietor
US (800) 869-5115
Canada 1-800-294-9462
European Union 00-800-2760-2760
Australia 0011-800-2760-2760

Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
Don Stott, Proprietor

Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889

Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
Merrimack, New Hampshire 03054
Ed Lee, Proprietor

Miles Frankl Ltd.
3601 Park Center Building
Suite 120
St. Louis Park, Minn. 55416
1-800-822-8080 / 952-929-1129
fax: 952-925-0143
Contacts: David Schectman,
Andy Schectman, and Bob Sichel

Resource Consultants Inc.
6139 South Rural Road
Suite 103
Tempe, Arizona 85283-2929
Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877

Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
Dr. Fred I. Goldstein, Senior Broker



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