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24 millionth visitor signifies growing interest in gold

Section: Daily Dispatches

11:20p ET Thursday, February 8, 2001

Dear Friend of GATA and Gold:

GATA Chairman Bill Murphy will be extending his stay in
South Africa by a few days to accommodate the many
requests he has received for meetings with participants
in the gold industry there.

Those meetings include the South African mining
minister and the president of the National Union of
Mineworkers. The union president told Murphy that the
union has been following GATA's work with great
interest for some time.

Murphy told me today that he keeps meeting wonderful
people who are extremely knowledgeable about gold.

As evidence of our progress, I'm appending an English
translation of a major article published Sunday,
February 4, in an important Afrikaans-language
newspaper, Rapport-Sake.

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

* * *

Gold pressure group gets South African support

By Curt von Keyserlingck
Rapport-Sake (South Africa)
February 4, 2001

More and more South African experts support attempts by
the Gold Anti-Trust Action Committee, an American
pressure group, to sue the American authorities and
some of the world's largest banks because of their
alleged conspiracy to keep the gold price artificially
low. The defendants include Alan Greenspan, head of the
American Federal Reserve Bank; Lawrence Summers, former
American secretary of finance; J.P. Morgan Chase;
Citigroup; Goldman Sachs; and Deutsche Bank.

GATA alleges that these banks rent gold from central
banks at a rate of 1 percent per annum, that they sell
it, and then invest the cash return in financial
instruments at much higher rates. By the time the loan
period expires, the banks buy gold again and return it
to the central banks.

quot;The stagnation of the gold price in recent years
offers these banks a licence to make money, because
they seldom have to buy the gold back at a higher
price,quot; an analyst said.

GATA claims that when gold prices increase over more
than two consecutive days, the banks sell large amounts
of gold or derivative instruments simultaneously to
push the price down.

GATA also mentioned that Greenspan admitted to the
American Congress that central banks are prepared to
lend increasing quantities of gold should the price

GATA estimates that the relevant banks play around in
this way with 10,000 to 20,000 tons of gold. This
equals about one third of the total gold reserves of
the world's central banks and more than four years'
production of the world's gold mines.

quot;GATA's arguments are convincing, and should there be
proof of a conspiracy, the price of gold will rise sky-
high,quot; said Mr. Piet Stoltz, gold analyst at BoE

He says it makes sense for the central banks to lend
gold to the defendant banks because the central banks'
gold reserves are valued at between $35 and $45 per
ounce on their books. The proceeds they receive of 1
percent on the present gold price of more than $260 per
ounce therefore offers an excellent return for the
central banks.

quot;The legal action is a courageous step,quot; says Mr. Allan
Cooke, gold analyst with Rice Rinaldi brokers. quot;It
challenges the most powerful banks in the world that
won't stop at anything to defend themselves.

quot;GATA's accusations make sense, but it could be
difficult to prove a conspiracy. It is true that the
sale of gold by certain banks is not transparent and
that a lot of transactions can take place behind the
scenes,quot; says an expert. quot;The banks can, however, say
that their actions are only part of normal trading.quot; He
does concede though that such activities may be a
contravention of the American Sherman Act on horizontal

The expert does not want his name published because he
works for a broker's firm owned by one of the defendant

Only one out of seven broker's experts approached by
Sake Rapport firmly believes that the price of gold is
not being manipulated and that it reflects normal
supply and demand.

Mr. Bill Murphy, GATA's chairman, who is currently
visiting South Africa, says every one of four gold-mine
groups, including AngloGold, donated between $20,000
and $50,000 so that GATA could act on its behalf.

quot;The mine groups do not necessarily agree with
everything we say, but they have nothing to lose if we
win the case,quot; he says.

quot;Even if we lose the case on technical points, the
defendants' evidence during examination may convince
the market that the price is indeed being manipulated.
That can cause price increases by a spate of gold
purchases, which will be too big for the banks to

The defendants have an opportunity until next month to
submit statements in which they apparently will assert
that GATA's complaint does not warrant the court's

quot;We need the facts that can be obtained during cross-
examination under oath,quot; Murphy says. quot;It can do no
harm. And those opposing us must realise that their
efforts could jeopardise employment opportunities for
tens of thousands.quot;

If GATA's allegations are proved, it may, however,
cause a serious crisis for the big banks, since they
will have to buy back tons upon tons of gold at much
higher prices than the prices at which they sold their
borrowed gold. That may force the banks to give their
support to prevent a systematic disaster.

A higher gold price may also mean a weakening of the
American dollar.

Mr. Mike Schuster, economist at Tradex, says that if
the price of gold should increase to $600 per ounce,
economical growth in South Africa could increase by 1
percentage point.