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GOLD PRICE SUPPRESSION VINDICATES GATA

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NEWS RELEASE TRANSMITTED BY CCNMatthews FOR: GOLD ANTI-TRUST ACTION COMMITTEE AUGUST 25, 2004 - 08:30 ET Sprott Report on Gold Price Suppression Vindicates Gold Anti-Trust Action Committee DALLAS--(CCNMatthews - Aug 25, 2004) - Sprott Asset Management's study confirming manipulation of the price of gold, "Not Free, Not Fair," published August 24, vindicates the Gold Anti-Trust Action Committee, GATA Chairman Bill Murphy said today. "To believe that central banks and bullion banks have worked together for years to keep the gold price down no longer puts you on the fringe in the investment world," Murphy said. "The Sprott study reflects the growing conviction among mainstream investment professionals that the banks have been playing with the gold market to mask their recklessness with the world economy." The Sprott study, written by Sprott chief investment strategist John Embry and his assistant, Andrew Hepburn, admits drawing heavily on GATA's work generally and particularly on the work of GATA statistician Michael Bolser and GATA consultants Frank Veneroso of Allianz Dresdner Asset Management, Reginald H. Howe of Golden Sextant Advisors, and James Turk of the Freemarket Gold & Money Report and GoldMoney.com. The Sprott study says of GATA: "We consider their work to be excellent in scope yet chronically under-appreciated by gold market observers. Disdain for GATA's allegations is not justified, in our opinion. Quite the opposite: More than all others, GATA displays an appreciation and understanding of the gold market's structure and dynamics. Whereas consensus forecasters see a free market roughly in equilibrium, GATA has amply shown that the gold market is both controlled and seriously distorted with respect to gold's fundamentals." The Sprott study's major conclusions: -- Central banks intervened surreptitiously in the gold market in the late 1990s to prevent a gold derivatives crisis that threatened the global financial system. This appears to have started around the time of the Long-Term Capital Management crisis and commenced in earnest after the post-Washington Agreement gold price explosion in 1999. -- At the root of this crisis was the speculative gold carry trade. So much gold was borrowed from central banks at low interest rates and sold into the market that an uncoverable gold short position developed. -- Long-Term Capital Management was short approximately 300-400 tonnes of gold when it collapsed in 1998 and this position appears to have been assumed either by a counterparty bullion bank or a central bank. -- The Bank of England's well-publicized gold sales that began in 1999 were the result of a political decision designed to manage the price of gold. -- The U.S. Exchange Stabilization Fund and the Federal Reserve have been active in the scheme to depress gold prices. Information in the public domain suggests that such intervention started between 1994 and 1996. A 1995 Federal Open Market Committee transcript reveals that the ESF conducted multiple, undisclosed gold swaps. The unwillingness of the U.S. government to reveal the details of these transactions indicates that their purpose was nefarious. -- The gold market supply and demand model of GATA consultant Veneroso is far superior to the consensus supply estimates of GFMS Ltd. -- Central bank gold loans probably total far more than the consensus estimates of 4,000 tonnes - more likely 10,000-16,000 tonnes and as much as half the nominal gold reserves of central banks. -- International Monetary Fund accounting regulations have obscured central bank gold loans and make it impossible to discern exactly how much gold remains in central bank vaults. -- Gold industry executives are far more inclined to believe that the gold market is being manipulated than most market observers think. -- The gold price falls so much more often in the New York market than in other markets as to defy all probabilities. -- Most gold market statisticians have misinterpreted data on gold derivatives, and those derivatives have committed far more gold to the market than is generally acknowledged. -- Gold derivatives are increasing even as gold producers are reducing their forward sales, indicating that official-sector selling remains a major source of gold in the market and a restraint on the price. -- Central banks are manipulating the gold price because a rising price would expose their loose monetary policies. Sprott Asset Management is based in Toronto, Canada, and manages more than $1.6 billion in assets. Report co-author Embry appeared on ROB-TV in Canada on Tuesday morning to introduce the gold price suppression report. The Embry interview can be viewed on the ROB-TV Internet site through Monday, Aug. 30, here: https://www.robtv.com/shows/past_archive.tv Information about GATA can be found on the Internet here: https://www.gata.org/ -30- FOR FURTHER INFORMATION PLEASE CONTACT: Gold Anti-Trust Action Committee Bill Murphy, 214-522-3411 [e-mail]