English translation of Der Spiegel article about GATA lawsuit

Section:

11:16p EDT Saturday, January 6, 2001

Dear Friend of GATA and Gold:

Thanks to GATA member Alex Wallenwein for this
translation of the story in Der Spiegel, the
major German news magazine, about our lawsuit
against the Bank for International Settlements
and the other conspirators against gold.

The story is enormously favorable to us and we
think it may have a huge impact in Europe. Please
distribute it as seems useful.

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

* * *

CONSPIRACY AT THE GENTLEMEN'S CLUB

U.S. Federal Reserve Bank Chairman Alan Greenspan has
been sued for gold price manipulation. Deutsche Bank is
also alleged to be involved in this shady business.

By Jan Dirk Herbermann
Der Spiegel
January 6, 2001

What do Fed chairman Alan Greenspan, the Bank for
International Settlements (BIS), and leading global
investment banks such as Deutsche Bank, J.P. Morgan,
and the soon-to-be former U.S. treasury secretary,
Lawrence Summers, have in common?

These gentlemen and banks are responsible for one of
the biggest scandals in economic history -- that is at
least what the American lawyer and gold analyst
Reginald Howe claims. Accordingly, the adviser for the
Gold Anti-Trust Action Committee (GATA), an
organization whose stated purpose is the fight against
this alleged manipulation of the gold market, filed a
lawsuit in U.S. District Court for the District of
Massachusetts in Boston.

Howe based his complaint on the U.S. Sherman Act. That
statute expressly forbids the fixing of prices in
international trade. "This cartel has fraudulently
suppressed the price of the precious metal to an
artificially low level," claims the plaintiff. The go-
ahead for these machinations allegedly came from the
White House.

Howe determined the BIS in Basle to be the instrument
of this "conspiracy," where the bosses of the most
important central banks maintain close ties like
members of a gentlemen's club. Howe is one of the few
private stockholders of the BIS (the vast majority of
shares are held by central banks) and is already known
as a troublemaker.

Officially the Basle institution, as well as Deutsche
Bank, refuse any substantive comment. The U.S. Federal
Reserve Bank left inquiries regarding the lawsuit
unanswered.

The complaints are heavy stuff: "Mining companies,
their employees, and owners are forced into financial
ruin as a result of the low gold price," says Howe. "In
developing countries, the weak are left by the
wayside." And, as paradoxical as it sounds at first
blush, the Wall Street banks supposedly pocketed
billions through the allegedly manipulated gold price.

Indeed, the metal has lost much of its luster. Until
World War I, the currencies of all of the most powerful
countries were tied to the price of gold. From World
War II to the early 1970s, the international monetary
system was based on the U.S. dollar as its exclusive
reserve currency, which was convertible into gold.

Although emotion and the mythical image of the shining
metal still dominate trade, its price has tanked
drastically after it initially soared at the end of the
'70s. For months now the price has been stuck between
$300 and $260 per ounce.

This mostly hurts gold producers like South Africa.
For the first time in its history did the Republic on
the Cape export more platinum and palladium than gold.
Even 20 years ago the glittering stuff lead the export
lists. Then dealers temporarily obtained prices upwards
of $800 per ounce.

Today, calculates GATA Chairman Bill Murphy, the gold
price should be at "more than $600 per ounce." For,
according to Howe and GATA, the financial elite trusts
in only one equation: Only a low gold price is a good
gold price.

A rising gold price is generally regarded as a warning
of a coming devaluation of money in the United States,
and a gold boom signals a weakening dollar in
international financial markets. Both are nightmares
for Greenspan.

If the gold price pushes too high, so claim the
critics, gold is dumped on the market in London and New
York, the most important trading centers. "Central
banks stand ready to lease gold in increasing
quantities, should the price of gold rise," Greenspan
confirmed in July 1998, testifying before the banking
committee of the U.S. House of Representatives. For
Howe this is an open and shut case: "This statement is
equivalent to an admission that the price of gold is
controlled."

The big money houses made hefty profits from leasing
gold. At the end of 1999 Deutsche Bank alone showed
trades with an estimated value of 5,000 tons of gold
-- 1,500 tons more than the official gold reserves of
Germany. Morgan, Chase, and Citibank declared figures
in June of 2000 that would be the equivalent of a gold
mountain of 8,461 tons.

The trades follow a simple pattern: Banks borrow gold
from central banks at extremely low interest. The
advantage for the central banks is that at least a
small profit is drawn from the largely useless piles of
gold in stock.

The banks then sell the borrowed gold bars. With the
proceeds they buy financial instruments, the yield of
which far surpasses the lease rate. This business is as
lucrative as it is risky -- and all of it is on margin.

If the gold price breaks out too far, Deutsche Bank,
Goldman, Chase, and consorts pay a heavy price. Then
the leasing rate would climb as well and -- worse --
they would not be able to pay for market purchases
required to return the borrowed gold, for the central
banks eventually want the borrowed gold back.

Even now the "gold carry trade" is out of control.
Experts estimate that the private banks owe central
banks as much as 7,000 tons of gold. "Too much to ever
be repaid," warn the experts of Solomon Smith Barney, a
division of Citigroup.

Therefore, concludes Howe, "Goldman, Chase, and
Deutsche Bank have choked off any apparent gold price
rally on the New York commodities exchange, COMEX,
through massive selling."

But Howe's theory is controversial. "Some of my clients
also believe in a conspiracy," says analyst Martin
Murenbeeld, the publisher of the Gold Monitor
Newsletter. "According to the data available to me, I
am not convinced that this theory is valid." Gold
Fields Mineral Services, a London-based consulting
company, accuses Howe of statistical misinterpretation.
It maintains that the conspiracy theory is off the
mark.

These experts rather ascribe the falling gold price to
the strong dollar and a low rate of inflation. In
addition, many central banks used even the smallest
rally in the price of gold to lose some of this dead
asset. Indeed, some 33,000 tons of gold are still
stored in the vaults of central banks and international
organizations.

When the combatants will finally trade punches must now
be determined by the presiding judge in Boston. Howe
hopes he will then be able to expose the gold cartel's
machinations before the eyes of the public. Greenspan
and the other representatives of high finance will then
be forced to testify under oath.