11a EDT Friday, December 15, 2000 Dear Friend of GATA and Gold: Here's a story from the front page of today's Toronto Globe and Mail, Canada's leading newspaper. CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. * * * GOLD PRICE CONSPIRACY ALLEGED By Peter Kennedy Toronto Globe and Mail www.theGlobeandMail.com December 15, 2000 Vancouver -- As the price of gold has slumped over the past couple of years, a theory has developed in some quarters that powerful forces are working to hold it down. Now the allegation has become the basis of a U.S. lawsuit. A Texas group that says it has received financial backing from major gold producers has accused top Wall Street investment firms of conspiring with the U.S. Federal Reserve Board, among others, to depress the price of gold. In a complaint filed last week in the U.S. District Court of Boston, Mass., the Gold Anti-Trust Action Committee (GATA) is seeking compensation for an alleged price-fixing scheme it says involves J.P. Morgan & Co. Inc., Chase Manhattan Corp., Citigroup Inc., Goldman Sachs Group Inc., and Deutsche Bank AG. GATA, whose contributors have included Canada's Placer Dome Inc., is alleging that the five Wall Street firms conspired with the U.S. Federal Reserve Board, the Federal Reserve Bank of New York and the U.S. Treasury Department and the Bank of International Settlements to depress the price of gold between 1994 and 2000. By doing so, GATA says they have prevented huge losses by financial organizations that borrow gold from central banks at low interest rates to resell on the open market. Banks that borrow gold lose money when prices rise because they must buy more gold to repay the loans at prices higher than what they got on the open market. Because of that, the complaint alleges, "over the past two years, Goldman, Chase and Deutsche Bank have regularly appeared as heavy sellers of gold on the New York Commodities Exchange whenever necessary to kill any significant rally." While the alleged scheme is said to have generated billions of dollars in profits for banks, the resulting downward pressure on gold prices has forced mines to close and pushed gold producers like Ashanti Goldfields Ltd. to the brink of bankruptcy, the suit alleges. "We think this will turn out to be one of the biggest financial scandals in U.S. history," GATA chairman Bill Murphy said. During an interview from Dallas, Mr. Murphy described himself as a 54-year-old financial newsletter writer who has decided to "do something about" what he sees as manipulation of the gold market, rather than just write about it. A GATA statement of claim names U.S. Federal Reserve chairman Alan Greenspan and Federal Reserve Bank of New York president William McDonough. According to the claim, the alleged scheme's objectives included preventing the gold price from signalling a warning of future U.S. inflation, which would have affected the international standing of the U.S. dollar and called further attention to the huge and unprecedented U.S. trade deficits. That in turn would have embarrassed the U.S. government, the lawsuit alleges. "Mining companies, their employees and shareholders, and developing countries have been ruined by the manipulation of the gold market, and it has prompted ordinary investors around the world to put their savings at greater risk than they would have done otherwise," Mr. Murphy said. He said GATA has taken legal action after receiving $285,000 (U.S.) in donations from some of the world's largest mining firms, including Placer Dome, Anglo American Gold Investment Co. Ltd. (Amgold) of South Africa, Gold Fields of South Africa Ltd. and JCI Gold Inc. Placer Dome spokeswoman Brenda Radies confirmed that the gold miner provided GATA with a $10,000 donation last year, prior to the resignation in February of its former chief executive officer John Willson. However, she said the company is not playing an active role in the affairs of GATA or its lawsuit. "We are neutral on the whole thing," she said. "I don't know what Mr. Willson's thinking was when he gave them the money." A spokeswoman for Goldman Sachs declined to comment on the price-fixing allegations which gold industry analysts and officials say are not new. "This has been kicking around for a couple of years now," said Roman Shklanka, a Vancouver gold-mining consultant and former chairman of Sutton Resources Ltd., which was swallowed two years ago by Toronto- based Barrick Gold Corp. Martin Murenbeeld, a Victoria-based gold analyst who publishes the Gold Monitor newsletter, said some of his clients believe in the conspiracy theory. "But I personally don't think there is much to it," he said. "The data available today and my own analysis [of gold pricing trends] suggests there is no conspiracy." Meanwhile, Reginald Howe, a former Boston lawyer and gold analyst who is acting as a consultant to GATA, said the lawsuit has been timed to coincide with a recent offer from the Bank for International Settlements to buy out private investors who own 13 per cent of the Switzerland-based organization. BIS, whose principal owners are the central banks of major industrial nations, is set to hold a meeting on Jan. 8 at which its board will vote on a proposal to offer the private shareholders about $9,280 (U.S.) a share. GATA is fighting the proposal in the belief that the offer represents a substantial discount to the net asset value of $19,099 a share. It also wants to stop the BIS from shutting out private investors who have bought its shares as an indirect way of playing the gold market. Meanwhile, Mr. Murphy said GATA is seeking a number of remedies, including a court order that would prevent the five investment firms named in the suit from manipulating or trying to manipulate gold prices on COMEX, the most important market for trading gold in paper forms, or elsewhere. The committee also plans to seek a court order that would force Mr. Greenspan and Mr. McDonough to resign as directors of BIS. Officials of the Federal Reserve Board have no authority to hold directorships of the BIS, the lawsuit alleges. -END- -------------------------- eGroups Sponsor -------------------------~-~> <FONT COLOR="#000099">eGroups eLerts It's Easy. It's Fun. Best of All, it's Free! </FONT><A HREF="http://click.egroups.com/1/9698/0/_/126/_/976896209/"><B>Click Here!</B></A> ---------------------------------------------------------------------_->
