Join the gold army''s advance on Washington


11:30p EST Tuesday, December 7, 1999

Dear Friend of GATA and Gold:

Here's the text of GATA's two-page advertisement to be
published Thursday, December 9, in Roll Call, the
weekly newspaper that covers the Congress of the United
States and is considered the best-read publication at
the U.S. Capitol.

We're very excited about this, hopeful of making a big
impact and mobilizing the gold industry and gold's
friends, and deeply grateful to those whose financial
contributions have helped to make this possible.

Once the ad is published, we will call on gold's
friends everywhere to ask members of Congress to
ensure that GATA's questions are answered.

GATA is fighting for the gold cause. If you haven't
joined us yet, please do. Gold's enemies won't stop
until gold fights back, and they are confident that
they have intimidated the whole industry and even the
countries whose livelihoods depend on gold.

Let's prove them wrong.

Please post this as seems useful.

Gold Anti-Trust Action Committee Inc.

* * *

December 9, 1999


Chairman, Federal Reserve System



Secretary of the Treasury

What Are You Doing With America's Gold?

Dear Chairman Greenspan and Secretary Summers:

On July 24, 1998, before the House Banking Committee,
and six days later before the Senate Agricultural
Committee, Chairman Greenspan made the following
statement: "Central banks stand ready to lease gold in
increasing quantities should the price rise."

Ever since that comment was made, there has been a
growing controversy about whether the Federal Reserve
and the Treasury Department have been actively involved
in the gold market. There has been speculation that the
U.S. government, through your agencies, has been
seeking to lower the gold price to rescue certain
financial interests, much as the Fed orchestrated the
rescue of Long-Term Capital Management last year.
Aggressive bullion dealers, hedge funds doing the gold
"carry trade," and unwise price speculation disguised
as hedging by gold mining companies are most frequently
cited as the beneficiaries of this government
intervention in the gold price. As with LTCM, there is
concern about severe risk to the world financial
system, this time because of irresponsible gold lending
policies of central banks.

The gold controversy reached the floor of the British
Parliament last June 16, after the Bank of England
announced plans to sell 415 tons of its gold:

"We cannot allow these rumors to grow, because they are
extremely dangerous to public confidence. It has been
suggested that the market is very short of gold, that
the short positions may be a substantial multiple of
the total amount of gold currently held by the Bank of
England, and that the bank's real motive is to save the
bacon of firms that are running those short positions.
If such a suggestion is being made seriously, it must
be dealt with authoritatively and definitively, and we
want an answer from the government now. Quentin
Davies, Member of Parliament"

The Bank of England's announcement collapsed the price
of gold from $290 to $252 per ounce. But when, on
September 26, fifteen European central banks announced
that they would restrict their gold sales and gold
lending for the next five years, the gold price soared
to $337. Word spread that the bullion banks were
panicking again.

As if right on cue but in uncharacteristic fashion, the
government of Kuwait then announced it was depositing
its 79 tons of gold with the Bank of England for
lending purposes. There was speculation that the New
York Federal Reserve Bank was using all means at its
disposal to push the gold price down to accommodate the
financial interests that were short gold.

The Question Demands An Answer: Is the government of
the United States intervening in the gold market and,
if so, why? Chairman Greenspan, we will take you at
your own word that you are intervening in the gold
market as you said you would if the price rose.

The Federal Reserve Bank's Open Market Committee may
have the authority to deal in gold coin and bullion,
but all purchases and sales, according to 12 USC 263-
359, "shall be governed with a view to accommodating
commerce and business."

If, rather, the Federal Reserve Bank or the Treasury
Department is depressing the gold price in order to
help various and numerous gold short sellers, it is a
clear and illegal violation of the bank's purpose
clause. The government's intervening to help one side
over another in a private contract is illegal,
fraudulent and unconstitutional. For the U.S. central
bank to use its powers to benefit one class of citizens
to the harm of another class of Americans is a gross
violation of the Constitution's equal protection

If the Federal Reserve intervened in the gold market
after the October price rise as you said you were
prepared to do, it was not to accommodate commerce and
business, but to accommodate one half of the parties to
a private contract who had shorted gold. The other half
of the parties to this same contract who bought gold
were cheated and deprived of a fair market price,
denied the equal protection of the law and cheated of
profit potential. It would be an illegal and fraudulent
act that was perpetrated by bankers who are unelected
bureaucrats reigning like tyrants without legal or
political supervision.

The manipulation of the gold market has caused
irreparable harm to gold owners, gold companies and
gold miners as well as all Americans. It destroyed a
free market, depressed the fair value for an important
financial asset, distorted the value of gold companies
on the New York and American Stock Exchanges and
decreased the value of its own and America's gold
assets. The Fed's price fixing action should be
investigated by the Securities and Exchange Commission
and the Commodity Futures Trading Commission. Indeed,
the SEC should be concerned that both the gold market
and the stock market generally may be constantly
manipulated now by surreptitious government
intervention. Whatever the policy and practices of the
Fed and the Treasury Department are in these respects,
this is a matter of the most profound public policy and
it should be a matter of public record.


1. Does the Federal Reserve or the Treasury Department,
either on their own behalf or on behalf of others,
including other government agencies, such as the
Exchange Stabilization Fund, lend gold or silver,
facilitate the lending of gold and silver, or trade in
any securities, such as futures contracts and call and
put options, involving gold and silver?

2. If the Fed or the Treasury Department do lend these
precious metals, do they do so only on a swap or
repurchase arrangement basis, or do they also lend

3. What are the credit criteria that a potential
borrower needs to establish with the Fed or the

4. What credit limits are applied to borrowers? How do
they vary between secured/swap lending and unsecured

5. How often are counterparty positions marked to
market in these transactions?

6. What happens if market price movements cause the
credit limits to be exceeded?

7. Does the Fed or the Treasury have any counterparty
credit utilizations in excess of 90 percent of the

8. Have any precious metal-related credit limits been
amended other than in credit limit reviews in the
normal course of business?

9. Do the Fed or the Treasury Department or any other
government agency ever own or deal in derivatives that
are connected with precious metals? Do any of these
agencies write call options against the Treasury's or
Federal Reserves gold holdings, or write naked call

10. Do the above-mentioned credit limits and mark-to-
market provisions apply to derivatives as well?

11. Have the Fed, the Treasury, or any other government
agency, either directly or through their management of
foreign custody accounts, collaborated with the Bank
for International Settlements, the Bank of England, or
any other central bank with a view to managing,
smoothing, or otherwise affecting the market price of

There is also great concern that U.S. gold reserves
have been lent or sold. Those gold reserves are a great
national financial asset, yet they have not been
audited officially since the Eisenhower Administration.
So in addition to answering the above questions, we ask
you to arrange an independent audit so that the country
may be assured that its gold remains in public hands.



Attorney at law
formerly Justice Department
and Treasury Department

Attorney at law
formerly legal staff,
Federal Reserve Bank

Suite 1203, 4718 Cole Ave.
Dallas, Texas 75205