The Christmas, end-of-year holiday
season is often a time of reflection for many of us. As a result of the
Terrorist attacks and warring strife in the world, the closing out of 2001
may be more poignant than most years. As chairman of The Gold Anti-Trust
Action Committee, it certainly is for me.
Chris
Powell and I will soon commence year four
in our effort to expose the manipulation of the gold price. From day one we
stated that our main goal was to expose the "truth" about the gold
market. That is what we told the Speaker of the House, Dennis Hastert; the
chairman of the Subcommittee on Domestic and International Monetary Policy,
Spencer Bachus; the chairman of the House Joint
Economic Committee, James Saxton; and the President of the United States,
George W. Bush, via his private fax.
Over the past four years we had
discovered massive amounts of evidence of gold market manipulation. None of
that evidence contradicts our initial assertion that gold was not allowed to
rise in price due to an orchestrated effort of certain bullion banks. Unfortunately,
we have learned the gold price manipulation extends into the International
Monetary Fund, the Bank for International Settlements, the Federal Reserve
Bank of the United States
and the U.S. Treasury's Exchange Stabilization Fund.
It is not a pretty picture. We are
talking about the most powerful and wealthiest institutions in the world. Who
wants to take them on under any circumstances?
That is especially the case for the
world's major gold producers that count on the bullion bankers for financing
and on the politicos for mining rights, permits, etc.
To question these powerful institutions
is to challenge the established elitists of the world.
But, that is just what must be done if
"truth" is to remain a standard to be aspired to. It saddens me to
say that GATA has found out the tedious way the "truth" is often
sacrificed by the establishment and mainstream press to preserve the
interests of "big money." How else can you explain the three-year U.S. media blackout of GATA and Reg Howe's ongoing lawsuit against The Gold Cartel in
U.S. District Court for Massachusetts?
Fortunately, that has not been the case
in South Africa.
The GATA African Gold Summit held in Durban
on May 10, 2001 was covered by all the major South African press and covered
for two days by the South African Broadcasting Company. All the major gold
producers in South Africa
have also financially supported the Gold Anti-Trust Action Committee's search
for the "gold truth". We are most thankful for their generous
contributions and appreciation of the efforts of the GATA camp.
One of those supporters in South Africa
is AngloGold, the world's largest gold producer. Their highly respected CEO,
Bobby Godsell, is also the chairman of the World
Gold Council. He is most unique in that he is willing to share his thoughts,
ideas and opinions with AngloGold shareholders over the Internet. It is most
admirable and reflects a most serious "truth-finding" effort on his
part.
The following is a correspondence
between Le Metropole Cafe
member and GATA supporter, Jim Bruce, and Bobby Godsell.
With all the commotion in the gold world these days, I think you will find
the exchange illuminating:
Dear Jim,
I have no problem with your sharing any part of our correspondence as you see
fit.
Have a good Sunday!
Bobby Godsell
Dear Mr Bruce,
Thank you for your email. For ease of
reference I offer you a response to your five questions, under each question,
and simply to distinguish answer from question I have put the answer in
capitals. Please do not hesitate to come back with a further response. I know
I work with less than full information, and value what I have learned from
many sources, including email!
Regards
Bobby Godsell
From: Jim Bruce
To: Bobby Godsell
Sent: 2001/12/15
Mr. Godsell,
It is an honor to write you sir and
thank you very much for the time you take with this email.
I am an AU shareholder (thru a number of
funds) and am in my mid-60's. I own my own computer
services company in upstate South
Carolina. I have been a gold buff for many years,
going back to at least the early eighties.
Frankly sir, I am frustrated because I
cannot help but believe the gold markets have to have been manipulated over
the last few years. Nor can I understand why, if it is not true, the WGC is
not standing up to that or promoting with gusto, gold as primarily having
monetary value and being an integral part of ones investment portfolio,
rather than push an agenda to sell jewelry.
I've read some of your commentary on the
net and respect your views. I have also followed GATA and Bill Murphy and visited
LeMetropole Cafe many times.
While understanding that Mr. Murphy
seems eccentric at times, and can also get quite angry and frustrated thereby
ticking off the gold establishment, he and his team do 'throw enough wood on
the fire' to make the average person lean towards manipulation as the only
logical reasoning for the suppression of gold prices. With half of the larger
mines, the WGC, the Fed, bullion banks, most of the news media and central
banks all ignoring him without comment (other than to call him a 'loon' from
time to time), it does make Mr. Murphy's accusations or conspiracy theory all
the more believable, as well as ominous to the average investor and, the
rapidly growing better than average investor.
I pray I do not insult your intelligence
with my comments or the following questions, it is
just that there is so much 'stuff' out there and I'm just a little fella
trying to make a living and leave my family a few bucks when I'm gone.
Some questions if I may:
1. Since no one in the gold industry has
refuted GATA's evidence, why would it not be possible to invite a Bill Murphy or Reg Howe to
London to
present that evidence to the World Gold Council? It sure would clear the air
for a lot of folks like me. Regardless of who would wind up being right. If not, could you give me a logical reason why you
wouldn't invite these folks?
SEVERAL RESPONSES:
1.1 REG HOWE IS IN COURT AT THE MOMENT. GOING
TO COURT HAS THE ADVANTAGE OF REQUIRING THE LITIGANT TO VERY SPECIFICALLY
FORMULATE HIS CASE, AND REQUIRING THOSE HE ACCUSES TO VERY SPECIFCALLY
FORMULATE THEIR RESPONSE.
1.2 I CONTINUE TO VALUE THE ROLE OF BILL MURPHY, CHRIS POWELL, GATA AND
THEIR FRIENDS. I THINK THEY HAVE RAISED MANY ISSUES. ISSUES SUCH AS MARKET
MANIPULATION ARE SERIOUS ALLEGATIONS REQUIRING A SERIOUS FORUM, SUCH AS A COURT
OF LAW. THERE ARE A NUMBER OF OTHER ISSUES ON WHICH I THINK GATA HAS DONE
GOOD SERVICE TO THE GOLD INDUSTRY AND ALL ITS STAKEHOLDERS.
I CONTINUE TO THINK THAT THE LEVEL OF
DISCLOSURE ON GOLD LENDING BY BOTH CENTRAL BANKS AND BULLION BANKS LEAVE MUCH
TO BE DESIRED. GOLD PRODUCERS ARE REQUIRED TO DISCLOSE IN GREAT DETAIL (EVEN
MORE SO SINCE FAS 133) AND DO SO. WE AS A COMPANY HAVE CALLED PUBLICLY AND
LOBBIED PRIVATELY FOR GREATER AND MORE REGULAR AND MORE MEANINGFUL DISCLOSURE
OF LENDING ACTIVITY BY BOTH CENTRAL BANKS AND BULLION BANKS.
1.3 THIS COMPANY HAS IN THE PAST MADE A
FINANCIAL CONTRIBUTION TO GATA. I HAVE TRIED SEVERAL TIMES (UNSUCCESFULLY -
NOT THROUGH LACK OF EFFORT ON MY OR HIS PART) TO MEET BILL MURPHY/ I WILL
CONTINUE TO TRY.
1.4 I CAN SEE MERIT IN A MEETING BETWEEN
BILL AND THE WORLD GOLD COUNCIL PUBLIC POLICY STAFF, ESPECIALLY ROBERT
PRINGLE, WHO IS THE INTERFACE BETWEEN THE WGC AND THE CENTRAL BANKS. I WILL
PURSUE THIS.
2. Assuming you win the bid for
Normandy, is AngloGold's interest in a lesser or slower liquidation of
Normandy's hedge book than would be in Newmont's case? Might it be greater?
2. MY SENSE IS THAT BOTH NEWMONT AND
OURSELVES WOULD APPROACH THE NORMANDY HEDGE IN THE SAME WAY, AT LEAST FOR THE
FIRST LITTLE WHILE. WE BELIEVE THAT NORMANDY IS OVERHEDGED, AND WE WOULD
DELIVER INTO HEDGE CONTRACTS AS THEY BECAME DUE, AND PERHAPS BUY BACK PARTS
OF THE BOOK AS ECONOMIC CIRCUMSTANCES MADE THIS POSSIBLE.
WHERE WE WOULD PROBABLY DIFFER IS THAT
WE WOULD NOT RUN THE NORMANDY BOOK DOWN TO ZERO. WE THINK THAT A MEASURE OF
FORWARD SELLING IS A PRUDENT PART OF BEING A LARGE PRODUCER: SIMILAR IN MY
VIEW OF A LARGE PRODUCER OF ANYTHING SELLING SOME PART OF HIS PRODUCTION IN
TERMS OF LONG TERM CONTRACTS. IF WE COULD DEAL DIRECTLY WITH END USERS THIS
WOULD BE ALL THE BETTER. I DON'T WANT TO MAKE TRADERS RICH!
3. As chairman of the WGC, can you
comment on whether the council has any special interest in United States
policy toward gold, and particularly in the accounts of the Exchange
Stabilization Fund, in which the gold market analyst James Turk claims to have
found evidence of improper government involvement in the gold market? Seems a
bit scary to me.
THE WORLD GOLD COUNCIL BELIEVES THAT
GOLD HAS A VALID, INDEED CENTRAL ROLE TO PLAY IN THE FOREIGN RESERVES OF ALL
NATIONAL BANKS. IT IS THE ONLY ASSET THAT IS NOT SOMEBODY ELSE'S LIABILITY. IT
IS ALSO THE MOST LIQUID INTERNATIONAL CURRENCY AFTER THE DOLLAR. THE WGC IS
CONSTANTLY ACTIVE ENCOURAGING PRESENT HOLDERS FIRSTLY NOT TO SELL, SECONDLY
IF INTENT ON SELLING, TO SELL IN A WAY THAT DOES NOT DISRUPT MARKETS (SEE
SWITZERLAND IN CONTRAST TO BRITAIN, IN THIS REGARD). IT ALSO HAS A CAMPAIGN
TO PERSUADE BANKS TO BUY MORE GOLD RESERVES, WHICH IS HAPPENING (SEE RUSSIA
AND CHINA FOR EXAMPLE).
IN REGARD TO THE UNITED STATES ALL OF
THE ABOVE APPLIES. HOW DETAILED THE DISCUSSION IS ON MATTERS SUCH AS THE ESF
I DO NOT KNOW AND WILL ENQUIRE.
SOME OF THESE ISSUES ARE DEALT WITH IN
THE REG HOWE COURT CASE.
4. You stated that AngloGold wants to
reduce its own hedging and especially Normandy's hedging for market-related
reasons. Can you share those reasons with an investor like me, or at least
comment on the your anticipated prospects for the gold price?
OUR POLICY HAS BEEN TO HEDGE A MAXIMUM
OF 50% OF FIVE YEARS PRODUCTION. THIS IS MODEST BY AUSTRALIAN STANDARDS. WE
HAVE NEVER REACHED THIS LIMIT. WE SEEK ONLY THAT NECESSARY LEVEL OF REVENUE
SECURITY TO ENSURE THAT OUR COMPANY CAN BE CONSISTENTLY PROFITABLE, AND THAT
WE ARE ABLE TO CONTINUE TO BE A SIGNFICANT DIVIDEND PAYER.
FOR NOW, WE BELIEVE THAT THERE IS MUCH
MORE UPSIDE THAN DOWNSIDE ON THE GOLD PRICE, AND INDEED OUR PREFERRED
SCENARIO ON THE GOLD PRICE WOULD SEE A PRICE IN THE EARLY $300'S FROM 2003. HOWEVER
BEING CONSERVATIVE WE CONTINUE TO PLAN THE COMPANY AT SPOT PRICES.
BECAUSE OF THE ABOVE WE HAVE RUN OUR
HEDGE DOWN FROM 18 MILLION OUNCES SOLD FORWARD AT 1 JANUARY 2001 TO 14
MILLION TODAY. WE ARE LIKELY TO CONTINUE TO RUN THE HEDGE DOWN IN PREVAILING
ECONOMIC CIRCUMSTANCES.
5. Does the WGC have a lobbyist in Washington
and/or any contact with the U.S. Treasury Department and the Federal Reserve
Board about gold policy?
THE WGC DOES NOT HAVE LOBBYIST PER SE
ANYWHERE. IN THE US IT DOES HAVE A STAFF MEMBER WHO HAS BEEN PROMOTING
INSTITUTIONAL INVESTMENT IN GOLD BULLION IN THE US (SCOTT RAM) AND HE HAS HAD
SOME CONTACT WITH THE TREASURY. THE CLOSEST THE WGC CAME TO THE ROLE YOU
DESCRIBE WAS ITS ACTIVE OPPOSITION TO THE PROPOSED SALE OF IMF GOLD RESERVES
TO FUND THIRD WORLD DEBT - A CAMPAIGN THAT WAS SUCCESSFUL.
Thanks again for your time.
Jim Bruce
brucej@infoave.net
HOPE THIS HELPS!
BOBBY GODSELL
-END-
On behalf of GATA, I have been to
Vancouver and Toronto in Canada: New York twice, Washington, D.C. 3 times,
New Orleans twice, Denver, Austin, Texas and Fairbanks, Alaska in the U.S.;
Paris; and to Johannesburg twice, Durban twice, Cape Town and Pretoria in
South Africa.
On January 7 I travel back to
Washington, D.C. to attend a conference titled "Federal Reserve: Myth
vs. Reality" at the National Press Club and meet with Robert Auerbach, a
conference coordinator, who will speak about waste and abuse in the Federal
Reserve.
Auerbach, a former economic advisor to
the House Joint Economic Committee, wrote "That
Shreddin' Fed" in the December 10 Barron's:
Just 18 minutes of Watergate tapes were
erased, while the Fed's "edits" veil years of historic record
By Robert D. Auerbach
"The FOMC also has shredded its
unedited transcripts for 1994, 1995 and 1996. FOMC members were told in 1995
that, even though they were "not permitted" to discard "raw
transcripts" of meetings before 1994, future unedited transcripts would
be "thrown out" and only transcripts edited by the Fed would be
retained."
This is most important to GATA because
of our own evidence of an extensive cover-up of the manipulation of the gold
price, evidenced in part by our own discovery in the 1995 FOMC transcripts.
At a January 1995 Federal Open Market
Committee meeting, Virgil Mattingly, the general counsel to that committee
made the following statement:
- "It's
pretty clear that these ESF operations are authorized. I don't think
there is a legal problem in terms of the authority. The statute [31
U.S.C. s. 5302] is very broadly worded in terms of words like 'credit'
-- it has covered things like the gold swaps -- and it confers broad
authority."
The GATA Army bombarded Senators,
Congressmen, the U.S. Treasury and Alan Greenspan asking for an explanation
of this stated reference to ESF gold swaps. This was pursuant to our Army
receiving hundreds of letters from Senators and Congressmen via the U.S.
Treasury that the ESF "has not held any positions in gold since
1978."
The heat became so intense that
Greenspan felt compelled to respond to Kentucky Senator Jim Bunning by
forwarding a memo to him that Mattingly had written Greenspan. Mattingly stated the following:
- "Given
the passage of time, some six years, I have no clear recollection of
exactly what I said that day but I can confirm that I have no knowledge
of any "gold swaps" by either the Federal Reserve or the ESF. I
believe that my remarks, which were intended as a general description of
the authority possessed by the Secretary of the Treasury to utilize the
ESF, were transcribed inaccurately or otherwise became garbled."
That just does not cut it and fits right
in line with Professor Auerbach's revelations.
It would be my pleasure to meet with
Bobby Godsell anytime, anyplace subsequent to the Washington trip. While I
would like to present our evidence of the manipulation of the gold price to
him, a full examination of that subject can be left to the U.S. Federal Court
for the time being, as he so notes.
There are other issues that can be
immediately addressed that could have a dramatic impact on the price of gold,
the South African Government, gold producers and people of sub-Saharan
Africa:
1. AngloGold reduced its hedges 4
million ounces so far this year. Many other gold producers have also reduced
their hedges. Why has it had no impact on the gold price?
2. At the GATA African Gold Summit,
macro-economist Frank
Veneroso presented 6 different methods he used to calculate
central bank gold loan numbers of 10,000 to 16,000 tonnes - numbers two to
three times those acknowledged by the gold industry. GATA has evidence that
the central banks and The Gold Cartel are flagrantly trying to hide the true
numbers from the general public.
The clue to the startling discrepancy
between the Veneroso numbers and the ones used by the gold industry may lie
partly in the treatment of gold swaps by the central banks. For example, the
IMF was asked:
Why does the IMF insist that members
record swapped gold as an asset when a legal change in ownership has
occurred?
The IMF answered:
"This is
not correct: the IMF in fact recommends that swapped gold be excluded from
reserve assets. (see Data Template on International Reserves and Foreign
Currency Liquidity, Operational Guidelines, para. 72,")
Yet, the following can be found on the
central bank of The Philippines website:
"Beginning
January 2000, in
compliance with the requirements of the IMF's reserves and foreign currency
liquidity template under the Special Data Dissemination Standard (SDDS), gold
swaps undertaken by the BSP with non-central banks shall be treated as collateralized
loan. Thus, gold under the swap arrangement remains to be part of reserves
and a liability is deemed incurred corresponding to the proceeds of the
swap."
The central banks of Portugal, Finland,
and the ECB itself, all confirmed (in writing) the Philippine's treatment of
gold swaps to GATA's Andrew Hepburn.
Don't the governments of the sub-Saharan
African gold producing countries, the gold producers, and the World Gold
Council deserve to know what the truth is? GATA would like to see an immediate
clarification on this issue from the various central banks, the IMF and the
BIS.
That truth could be incalculable to the
well being of the poor in sub-Saharan Africa, for GATA believes if the truth
were known the gold price would rise above $600 per ounce.
3. Former U.S. Treasury Secretary
Lawrence Summers and present U.S. Treasury Secretary Paul O'Neill have
refused to answer any questions asked of them by many Senators and
Congressman. What are they afraid of revealing and why have they been silent
on this serious issue for 3 years? The Gold Anti-Trust Action Committee would
like to formulate a series of questions for Secretary O'Neill, to be
presented to him at the highest of "official" levels.
In ending, I would like Bobby Godsell
and all our gold producer supporters around the world to know that nothing
touched Chris Powell
and I more than the following e-mail. It says it all for us and reinforces
our beliefs that we are doing the right thing and going in the right
direction:
My name is Hendrick Masemola from South
Africa. I learned about your great work in the December issue of New African
magazine and I also went through your web site.
All I can say is that, you are doing a
wonderful job. I am very touched by your courage for truth. I am also aware
of the risks that you are putting yourselves in together with your beloved
families in search for truth.
I also think that you are aware that you
are taking on the big guns who won't just sit down and watch you guys
exposing them, if not taking away their daily bread. I can only say that, now
that you have go this far please do not give up. The very same truth that you
are after will set you free.
And if your goals are not achieved now
know that an awareness has been created, and we will take the fight on, and
if we fail, we will make sure that the coming generation continues until the
original goal is achieved, of which I think wherever you guys are going to
be, you will be happy.
I am a masters student in politics at
the University of South Africa (UNISA) and I am employed by the Department of
Politics as an Academic Assistant, I wish that we can learn about this kind
of politics because, I think that it affects our lives directly, rather than
the philosophy of Aristotle and so ever.
On behalf of the poor people that you
are fighting for, those who are aware of your work and from those who are
not. From those who can read and from those who cannot. I would like to say
thank you and please do not give up and never let the sun go down on us.
Hendrick Masemola
Thank you Hendrick, for putting so much
into the proper perspective as the year 2001 soon fades into the history
books.
Bill Murphy
Lemetropolecafe.com
Le Metropole
Café is a Membership site. Visit and Experience a 2 week Free Trial !
Bill Murphy is chairman of the Gold Anti-Trust Action Committee
and proprietor of www.LeMetropoleCafe.com, an Internet site devoted to financial commentary
with emphasis on the precious metals.
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