10:35a ET Thursday, May 24, 2001 Dear Friend of GATA and Gold: The following dispatch from yesterday apparently didn't make it through to everyone on our email list, so I'm sending it again in the hope that those who get it twice will forgive the duplication. CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. * * * South Africa Watch: Gold Spike Punctures Banks' Cozy Cartel By Adam Aljewicz Dow Jones Newswires May 23, 2001 JOHANNESBURG -- The latest run-up in the gold price has left a lot of investment bankers nursing extremely sore positions. The reason is that gold has risen more in the last two weeks than in the past two years. You've probably heard all of the reasons and more, but just in case you've been in geosynchronous orbit for a while, market commentators have cited inflation, technicals, fundamentals, rising oil prices, and rising tensions in the Middle East. The usual suspects, I hear you cry. But whatever the reason there seems to be something much more sinister going on. The Federal Reserve and other financial institutions stand accused of trying to force down the price of gold and faces possibly embarrassing revelations if a legal case against top financial institutions gets under way. A group of disgruntled gold investors collectively calling themselves the Gold Antitrust Action Committee, under lawyer and gold analyst Reg Howe, is pressing for a full judicial hearing of its claims that the Bank for International Settlements, central banks, and investment houses have colluded to keep the gold price down, because they all stand to lose a packet if it goes up. If allowed to go to the discovery stage, obliging banks to reveal their complete documentation, the case might force a number of U.S. Federal Reserve officials, including Fed chairman Alan Greenspan, on to the stand to be cross-examined on their motives. Or course, GATA's case may well be a Trojan Horse, but the case, if it continues, will reveal true motives on both sides. "For people who are short of gold, the high gold price is a disaster," said a South African gold mining executive, requesting anonymity. "And they'll do whatever they can to make sure sentiment doesn't turn positive. But don't print that or I might be shot on the way home," he said. A decision on whether the case will go to discovery is earmarked for the end of June. Lease Rates Commentators have cited a recent World Gold Council meeting for gold's rally, but who's taken any notice of the WGC in the past few years? Not gold. Some say it's the market's technicals, but technicals are, more often than not, kick-started by the fundamentals, and these haven't changed in years. Demand still exceeds mine supply. Some say it's inflation, but inflation has been rearing its head for a while now and anyway, the past few years have seen a glut of gold analysts arguing that gold's relationship with inflation went out years ago. Some even venture that the relationship was never real and just a cruel joke invented by former governments to prop up its value. Tensions in the Middle East and rising oil prices? Gold's seen it all before. More significantly, though, are reports that central banks are no longer lending gold to commercial banks as aggressively as before, so lease rates have risen to reflect the relative scarcity on the market, driving up the cost of borrowing the metal. This means that speculators who have borrowed gold in the past at lower prices, expecting to pay it back later, have been heavily squeezed. U.S. institutions are outraged. When gold rallied to $284/oz on Comex Friday both Chase and Goldman Sachs were said to have been selling with every ounce they could muster. Every time it approached $275/oz they sold heavily to drive the price lower still. Some would say this reeks of desperation, but the bears say gold's rally is inexplicable, a flash in the pan, that gold's fundamentals don't warrant a higher price, that the demand out of India is purely seasonal, and that the price will plunge to the low $260's before too long. If it does, the banks will be popping the champagne corks down at the Plaza Hotel. The bulls, meanwhile, point to tightening lease rates, inflation fears, and talk the Bank of China is converting its dollar reserves into gold -- all factors the banks don't want to know about. The case continues ... in court? -END- Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/