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South China Morning Post features RBC report, GATA''s work

Section: Daily Dispatches

2:08p ET Tuesday, June 25, 2002

Dear Friend of GATA and Gold:

The gold price suppression story rumbles on around
the world.

Today's Toronto Globe and Mail published on Page B-14
the commentary dispatched to you earlier today from
the newspaper's Internet site.

And the South China Morning Post, the big English-
language newspaper in Hong Kong, today published its
own story about the pro-gold, pro-GATA report issued by
a fund manager for RBC Global Investment Management
Inc. While the newspaper's Internet site is available
mostly by subscription -- -- CNN's
Internet site reproduced the story, and a check of the
index at the Post's Internet site confirms that the
story was indeed published today.

The Post story is fascinating for its inclusion of
details of GATA's work that haven't been reported in
the RBC controversy. Someone at the Post has been
looking up stuff on us, not just recycling other
recent news reports. But the Post makes one mistake:
It says GATA retracted its claim that Long-Term
Capital Management Inc. was short gold. In fact,
LTCM stopped pursuing the issue when GATA stood by
its claim.

The South China Morning Post story is appended here.

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

* * *

Missive adds weight to gold conspiracy theory

South China Morning Post
June 25, 2002
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The gold bugs got a boost at the weekend. An investment
letter by John Embry, a money manager with the Royal
Bank of Canada, appeared to back the central argument of
conspiracy theorists who for more than three years have
been crowing about the co-ordinated attempt to keep the
yellow metal low.

According to the theory, the United States Federal Reserve,
the Bank of England, a consortium of Wall Street banks
headed by JP Morgan and Goldman Sachs, and others
ganged together in the mid-1990s to keep the price of
gold at less than US$290 an ounce.

In Mr. Embry's letter -- later called an quot;internalquot; piece
and played down by his bank -- the manager reportedly
asserted that manipulation of the gold price began in
1995 and that quot;those with a vested interest in containing
the price of gold -- central banks, bullion banks, heavily
hedged gold companies -- will not die easily, but the tide
is moving strongly against them.quot;

The price manipulation theorists -- who include the Gold
Anti-Trust Action Committee (GATA) -- took Mr. Embry's
words as a huge vote of confidence for their take on the
depressed gold market of the 1990s.

The gold bugs hold that the price has been manipulated
by the massive short positions built up by banks over the
years -- positions aided by an extremely generous lease
rate of about 1 percent by the central banks. Gold
producers too have played a part, taking out billions of
dollars of derivative contracts to hedge against the falling
prices, the bugs maintain.

The banks have purportedly been borrowing the gold,
selling it on the market, and ploughing the sales proceeds
into better-performing assets. That has left them with tens
of billions of dollars in short positions in gold; a serious
enough increase in prices and the global financial system
starts looking wobbly.

Hence, the theorists say, the bailout of hedge fund Long-Term
Capital Management in 1998 was, in part, an attempt to keep
the price of the yellow metal depressed. GATA accused the
hedge fund of being short 300 tonnes of gold, but a letter from
the fund's lawyers saw GATA back down.

The gold bugs also contend that the U.S. authorities have been
keeping gold prices depressed to bolster the price of the U.S.
dollar and maintain the trade deficit, allowing the U.S. to
maintain its position as investment destination par excellence
and paying for the late 1990s boom.

Dismissed by many as a few cans short of a six-pack, the gold
bug theorists have nevertheless kept their foes busy over the
past few years. They have published report after report
exposing the banks' and producers' positions as well as studies
of central bank gold hoards. They prompted the introduction of
a bill in the U.S. Congress forbidding the Federal Reserve and
Treasury from intervening in the gold markets and took the
Bank for International Settlements and Alan Greenspan, among
others, to court for manipulation. The case was thrown out of
court last year.

The mainstream line is that gold slumped because of a
widespread perception at the end of 1990s that, with the
inflation demons tamed, it was a relic of a former world. Not
that any recent events -- including oversupply in the past decade,
the sudden rise in gold prices on renewed Japanese buying, and
growing investor risk aversion -- have shaken the gold bugs'

quot;This is one of the most important reports ever written on the
gold market. They understand the dynamics being played out,quot;
GATA Chairman Bill Murphy said.