11p ET Tuesday, July 24, 2001 Dear Friend of GATA and Gold: Given the interest in the statement by the seemingly flummoxed counsel to the Federal Reserve that he can't remember talking about "gold swaps" and must have been misquoted by his own agency, you might want to read the following exchange I had today on the bulletin board at www.USAGold.com with that excellent Internet site's proprietor, Michael Kosares, who is as good an analyst of the gold market as I know and whose commentary occasionally has been posted to you. Maybe what follows is too much "inside baseball," but some of gold's partisans may find it useful in understanding GATA's operations and aspirations. CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. -------------------------------------------------- Exchange at www.USAGold.com between Michael Kosares, proprietor, and Chris Powell, secretary/treasurer, Gold Anti-Trust Action Committee Inc., July 24, 2001 * * * USAGOLD: This backtracking by Mr. Mattingly looks very bad. There are some holes in this thing, Chris, which I would like to see clarified. As I recall, the meeting in question had present Mr. Mattingly, Alan Greenspan and Lawrence Lindsay (then Fed Board member, now chief economic advisor to President Bush). As I recall, the man asking the tough questions was Mr. Lindsay. If Mr. Greenspan was there, why is he asking now whether or not Mattingly made the statements in question? I do believe if my memory serves correctly that Greenspan reacted directly to Mr. Mattingly's statments. As chairman of the Federal Reserve, the time to ask such questions would have been at the time Mattingly was talking about the "swaps," not now by formal letter, but I do not recall any questioning. (As a matter of fact, I do remember part of the conversation being excised when these minutes were supposed to be a matter of public record. That alone justifies disovery, in my non-legal view.) Is Greenspan attempting a bureaucratic cya or is the whole thing an attempt to get a cover thrown over the matter for the benefit of the American public -- particularly the benefit of gold advocates and owners? I saw Bill Murphy's reposting of the Mattingly comment. This statment was not made by mistake. The specificity is a tip-off. Question, Chris: Where did the story on the Greenspan inquiry originate, the Mattingly camp or the Fed? And why did they go public (in yours or Bill's opinion)? They could have sat back and hoped the whole thing would blow over, or that the Howe suit would not go to discovery. Does the GATA group believe that this is a firm indicator that the Howe suit might go to discovery? This appears a strange turn of events from where I'm sitting. I can't believe that Alan Greenspan actually wrote Mattingly for a clarification and then the letter and results actually got published. Is it possible to provide the sequence of events -- particularly with respect to the letter exchange -- for our readers? Does anyone in the GATA camp have an opinion why this happened now? I consider these events a major breakthrough. Oh, and most importantly, who made the whole thing public? * * * CHRIS POWELL: Hi, USAGold, old friend! Thanks for your interest in the Fed's strange response to the inquiry made by Senator Bunning on behalf of two of his constituents, Mr. and Mrs. Rupert Raymond of Lexington, Ky. Let's see if I can answer your questions about it all. If I miss something, let me know and I'll try again. Yes, the record of the January 31, 1995, meeting of the Federal Open Market Committee says Greenspan was presiding. So it IS a little disingenuous of him to ask his counsel, Mattingly, to explain what was meant about the gold swaps at the meeting without volunteering his OWN understanding, which is surely as complete as Mattingly's could have been -- if poor Mattingly hadn't come down with a convenient case of amnesia. I don't think that anyone at the FOMC meeting reacted directly to Mattingly's brief reference to the gold swaps -- at least the edited minutes recently made public and discovered by GATA show no reaction on the gold issue. But there's no telling how the FOMC discussion really went; the minutes are heavily censored before their release -- five years later -- and no doubt the reference to the gold swaps made its way into the public record only accidentally. Surely it would be expunged if the Fed was able to do the minutes over again. This is how I understand the chronology here: 1) For a long time now GATA has been urging its supporters in the United States to write to their congressmen and ask them to get answers from the Fed and the Treasury about the U.S. government's policy toward gold. As we uncover more information, we revise our questions. Indeed, part of our problem until recently may have been that we were asking the wrong questions, or not asking them specifically enough. For example, we had been asking whether the Fed, Treasury, or Exchange Stabilization Fund were "leasing" gold -- and we were told, quite officially, no. Then GATA's Michael Bolser, assisting Reg Howe in our lawsuit against the Fed, the Treasury, the Bank for International Settlements, and the bullion banks, discovered the FOMC minutes' reference to gold "swaps." The implication here is that the U.S. government trades gold with another party, and that OTHER party leases the gold. While the U.S. government is effectively sponsoring and underwriting the gold leasing, the U.S. government can pose as not doing the leasing itself -- hence a negative answer to GATA's gold leasing question may be technically accurate in the narrowest and most contrived Clintonian sense, even while being misleading and MEANT to mislead. Greenspan's knowledge of the gold swaps well may have been the basis of his famous remark to Congress a couple of years ago that central banks were ready to lend gold in increasing quantities should the price rise. Oh, not MY central bank, Greenspan exclaimed when GATA called him on this point. His letter to Senator Lieberman, prompted by GATA's first round of questions, explained his gold leasing remark as having been based on what he had "perceived" as the policy of other central banks. Of course if the U.S. government was essentially underwriting the gold leasing of those other central banks, Greenspan's "perception" would have been awfully accurate, no? 2) A couple of weeks ago GATA updated the questions it urged people to put to Congress. We did this to encompass the gold swaps and the reclassification of the gold at West Point. These new questions are very comprehensive. You can see them here: http://groups.yahoo.com/group/gata/message/821 But it seems that our Kentucky friends, the Raymonds, wrote to Senator Bunning BEFORE these updated questions were distributed, and this may explain in part Greenspan's less than comprehensive response. No matter. What we have gotten in this round of correspondence is very interesting and revealing, and even now we are pressing, through Congress, for answers to the more comprehensive questions. 3) This latest correspondence from Greenspan was disclosed in a very ordinary way. The Raymonds wrote to Senator Bunning. Senator Bunning wrote to Greenspan. Greenspan replied to Senator Bunning. Senator Bunning forwarded the reply to the Raymonds. The Raymonds, doing what we have asked all our friends to do, promptly provided it to GATA Chairman Bill Murphy. GATA proceeded to publicize it via email to our 1,500 supporters and via postings on the Internet -- including posting at this invaluable forum -- and an editor at Dow Jones Newswires, who is on our mailing list, thought it was interesting enough to merit a story. That is, GATA is the source of the publicity here. But it is very clear from Greenspan's responses (and from Mattingly's memo, which cites the Howe lawsuit) that the people at the Fed know GATA very well and what we're trying to do. Indeed, I wonder if Old Mealy-Mouth himself, supposedly a gold advocate in his youth, wasn't giving us a sort of confirmation by providing Senator Bunning with such an inane and inadequate and yet revealing response. (Like most members of Congress, Senator Bunning has no idea yet of what he has stepped in here; he was just doing an ordinary service for some constituents, asking government officers to answer their wholly reasonable questions. And all of a sudden his office gets a call from Dow Jones Newswires.) 4) Yes, Greenspan could have declined to answer the questions from Senator Bunning. But there is a great risk in that, especially since the same questions are coming in from various congressmen as a result of GATA's attempt to mobilize the grassroots gold constituency. Refusing to respond to a congressman is a very good way of raising suspicion and even prompting more formal investigation. While Treasury Secretary O'Neill has yet to respond to GATA's most recent questions, I think time is running out for him. He will have to answer eventually, or, perhaps just as well, say publicly that he refuses to answer -- IF our friends keep pressing their congressmen to follow up. THAT is the big challenge to GATA and the gold cause right now. Questions will be evaded or nonsensical answers given by the Fed and the Treasury as long as congressmen really aren't paying attention, as long as they are only playing intermediary postmen. To bust the gold suppression scheme, we probably will have to get a few congressmen both to understand the issue AND to work up the courage to press it, even though pressing it will cross almost all the money and power in the world. We're working on that, but it's a tall order. For if GATA is right and U.S. economic policy for the last five or 10 years or so has been based on the surreptitious suppression of the gold price and a misimpression of the strength of the dollar, then nearly all economic decisions made by individuals and governments throughout this time have been based on a false premise, and the whole world is wrong economically. Do you think very many people really want to know this? We think that the highest officials of the U.S. government, including certain members of Congress, already do, and that it terrifies them. 5) But note the pattern developing here. Mattingly can't remember and even suggests that the Fed's elaborate stenography service misquoted him -- though the Fed's own procedure is to give its officials preliminary copies of meeting minutes so that they may edit their own remarks prior to publication, something Mattingly declined to do for six years! And asked the other day about the gold reclassification issue by Rep. Ron Paul at a House hearing, Secretary O'Neill lapsed into remarks about the authority of the Exchange Stabilization Fund to deal in gold -- which wasn't Paul's question -- only to indicate that he did not have the information Paul wanted. So Paul asked O'Neill to look into the matter and reply later. All this signifies that we are finally asking exactly the right questions and that our questions cannot be answered without causing tremendous problems for the government and others. 6) While these developments are interesting, I doubt that they will have much bearing on whether the Howe case survives the defendants' dismissal motions and reaches discovery. Remember, all this is taking place outside court and beyond the court record -- unless Howe finds some way to put it into a new brief, which may be difficult. If the lawsuit survives dismissal and enters discovery, we will have much fun. GATA has believed from its first day that we could end the suppression of gold if only we could get into discovery in a lawsuit; we wouldn't have to win the lawsuit itself but simply compel production of evidence and publicize it. But we can't count on this; we have to pursue the truth about U.S. government policy toward gold any way we can. The lawsuit is wonderful but it well may fail, even as congressional inquiry may succeed. 7) Why is this stuff happening now? Because GATA is always trying to do SOMETHING to shake things up. Some things work and some don't. The congressional approach has worked before for us, and with this latest letter from Greenspan and the Mattingly memo, it worked again. 8) Just imagine how much information might be shaken loose if the whole gold world rose up to get the attention of Congress. The World Gold Council alone has an annual budget of $50 million or so and could get to the bottom of the gold suppression scheme in a few weeks by spending 1 percent of that on legal and political representation in Washington. One or two major U.S. mining companies could accomplish the same thing. Instead the WGC does jewelry commercials and the mining companies bury their heads in the sand and they all leave gold's real work to a few amateurs begging little contributions from ordinary people who already have lost their shirts in the gold market and gold shares. Why is the industry so unhelpful? Probably because the big companies that run the WGC are privy to the price-suppression scheme and hope to clean up in it by driving the smaller and the unhedged mining companies into bankruptcy or into acquisitions at distress prices. Barrick already has swallowed Homestake. Will AngloGold get hold of Gold Fields? And so on. 9) Well, we at GATA do what we can with what we have. Sometimes we strike out. On our worst day we still do more for this cause than anyone else -- if I do say so myself! But the key right now is to make everyone with an interest in gold understand that HE is the key to our success -- that ALL of us can do something crucial by spending an hour or so to write to our congressmen and ask them to get answers to our questions, and then follow up and follow up and follow up. The same thing can be done by our friends in South Africa and Australia and other gold-mining regions with their own governments. This is simple democracy. Cynics can sneer at it all they want because of the power we're up against, but this is actually how the world works. Good causes almost always start small. A few people get together and resolve to act rather than despair. Thus are revolutions made. William James wrote that "the eternal forces of truth ... always work in the individual and immediately unsuccessful way, underdogs always, till history comes and puts them on top." Well, with a little more help, history just may be coming to gold. If so, then "fiat iustitia et ruant coeli" -- Let justice be done though the heavens fall. -END- ------------------------ Yahoo! Groups Sponsor ---------------------~--> <FONT COLOR="#000099">Small business owners... Tell us what you think! </FONT><A HREF="http://promo2.yahoo.com/sbin/Yahoo!_BusinessNewsletter/survey.cgi";><B>Click Here!</B></A><FONT COLOR="#000099"> </FONT><A HREF="http://us.click.yahoo.com/vO1FAB/txzCAA/ySSFAA/WfTolB/TM";><B>Click Here!</B></A> ---------------------------------------------------------------------~-> Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
