first majestic silver

GATA's Journey to South Africa

February 17, 2001

There is no way I can do proper justice to my trip to South Africa, but I will cover it as best I can. While it would have been better to write details down as the days went by, there was little time to do so. It is from fond memories that I now relate my hectic adventure to you.

The South African countryside is very beautiful and I was fortunate to meet many wonderful people, but of most importance was the fact that GATA's revelations of the manipulation of the gold market were publicized by the SA press and were personally presented to important SA officials.

My first meeting was an enjoyable one with Chris Thompson, Gold Fields Chairman, who listened very attentively. That was followed by a lunch with newsletter writer Aida Parker, who had just written a piece called "Gold Price Manipulation." Aida is quite the character and one tough babe as she was a war correspondent during the Arab/Israeli war. Reg Howe was very impressed with her insightful coverage of his Complaint.

That afternoon I met with Nick Goodwin, South African gold guru analyst, and Johann Blersch, Managing Director of Ings Barings Bank. That meeting went well and Nick arranged a meeting with ten of the senior gold analysts in Johannesburg the next day in his office to listen to a GATA presentation. It amazed me that Nick could corral so many of them on such short notice. Tuesday started out with a David McKay MiningWeb interview.

Tuesday late afternoon I headed to the airport for a trip to Durban (by the Indian Ocean). Rhoda Fowler of Media-Link did a marvelous job scheduling a Wednesday morning breakfast meeting with the Durban press and business leaders in the community. After the meeting, there was a 3 1/2 minute TV interview that was aired all over South Africa during the day.

While waiting for a scheduled meeting with Zulu King, Goodwin Zwelithini, Rhoda, her helpful brother James Stock and I went up the Indian Ocean coast to Umhlanga for a relaxed seaside lunch. The King was delayed, but eventually we had a very special two hour meeting over dinner that lasted until 10:30 in the evening. That meant another sleep over in Durban ahead of an 8:30 press interview back in Johannesburg the next day.

The King was very sharp, lamenting that the Rand had weakened ever since the new government came into power and that the price of gold had not rallied at all with the price of oil. Many of his Zulu subjects are gold miners and have been very negatively effected by the suppression of the gold price. At the end of the meeting, he asked his aide, Moses, to call Deputy-President Jacob G Zuma, who is also a Zulu, on our behalf. The Zulus are one of the many tribes in South Africa.

A wee bleary eyed, I just made it on time for a meeting with Curt Von Keyserlingk, Business Editor of Rapport, the well read Afrikaner newspaper. Also attending was superb technical analyst Daan Joubert, who often presents his work at Gold-Eagle.

That conversation presaged a trip to Lordium in the South African countryside for a Moslem radio station interview. It struck me that when I walked into the Moslem radio station, the interviewer said that he saw me on television the day before. I thought to myself: now we are getting someplace!

Listening to the show in Cape Town was Professor Umar Ibrahim Vadillo, Founder of e-dinar, who is urging that Muslims all over the world buy dinar gold coins. We later met in Cape Town and I learned a good deal about the movement of this worldly Spanish professor who resides in Scotland.

Early on Friday I met with the South African Chamber of Commerce, followed by a meeting with Bheki L. Sibiya, Executive Director of Transnet and Chairman of South African Airways. Bheki is a leader in the South African business community and grasped the Gold Anti-Trust Action Committee findings very quickly.

That afternoon was spent on the phone talking to prominent South Africans and then I set out for downtown Johannesburg to do the Alec Hogg Classic Business radio show. That was almost a disaster as my driver's car broke down 1/2 mile from the interview and I had to run the rest of the way - right through the area one is not supposed to be as evening sets in. Made it with 7 minutes to spare.

By that evening and week's end, I was ready to relax and did so with two friends of Daan Joubert. Both are very successful businessmen who knew the gold market well. One of them owns the last private elephant farm in South Africa. They took me to Baccarat, restaurant extraordinaire, for some crocodile and ostrich. We had much fun and plan to meet up again.

On Saturday it was time to set sail for Cape Town and the INDABA 2001 mining conference. Soon after my arrival, Peter George, who is well known in South African gold circles, came by to take me for a climb up Judas Peak - high above the geographically spectacular Cape Town.

It was an hour trek to reach our elevated destination and some flowing water to drink. "Be careful, it is slippery," Peter warned. About 20 seconds later, I fell anyway and started to go down the mountain, but managed to grab on to a thorny bush. In a bit of a dither, I tried to pull myself up, but fell back and further down. This was becoming rather scary and I looked up for Peter's help. Instead, he looked down at me and blurted, "I told you it was slippery."

If that was not bad enough, I could not bare to tell him I am afraid of heights. A relieved me was happy to make it back safe and sound to his wonderful home overlooking the Atlantic Ocean. Peter was a most gracious host and became a new friend for life.

Sunday we took a drive to vineyard country - called Franschoek. It is spectacular countryside. One of the vineyard owners organized a luncheon at his vineyard restaurant to hear about the gold market. When they heard that press coverage of my trip was going well except for the mainstream Business Day (the Wall Street Journal of South Africa), they said, "we will fix that." Within 20 seconds, the attendees at the lunch pledged $50,000 for a full page ad in Business Day. They said you write it, we (the instantly formed 'South Africans for a free gold market') will pay for it. The money was collected and in the till by Monday noon.

Both stunned and delighted, Peter and I sped back to Cape Town and I began writing. The input Peter George contributed was invaluable as he and I spent the next two days editing and re-editing. Peter was still calling in word changes at the deadline hour late Tuesday afternoon. More on the ad later.

Reg Howe and I hooked up on Monday and met with Mark Wellesley-Wood, Chairman of Durban Roodeport Deep that afternoon. He was most impressive and both Reg and I could see why Durban Deep has been turned around and is a gold bull's delight. As most of you know, Durban is very leveraged to the gold price will substantial gold reserves and resources to its credit.

Later that evening Reg, Peter, his son Quentin and I had dinner with Brett Kebble at the "Nellie", the Lord Nelson. Brett, CEO of Western Areas, and his father Roger, Chairman of Western Areas, are legends of the South African gold industry and not afraid to stand up for their beliefs. Brett will go down as a hero one day - which will be revealed in time.

The Indaba 2001 Conference kicked off on Tuesday morning with Anglogold's Kelvin Williams one of the early speakers. It did not take him long to make a mocking statement about the "conspiracy crowd," which drew chuckles from the attendees. Later, he told the press that GATA was full of "adult fantasies." I thought to myself, you punch today Kelvin, GATA counter-punches tomorrow - we'll see who gets the last laugh when the "Gold Price Manipulation" ad breaks the next morning.

Late that morning, Reg and I met with Ian Davidson, a member of Parliament in the Democratic Party. Ian, a former mayor of Johannesburg has a legal background and is a former stockbroker so he quickly grasped what we were saying. We learned later that Ian is the kind of fellow who is not afraid to mix it up in Parliament - as we left our meeting with him he told us he would bring the GATA issue up in Parliament, which was to begin a new session that coming Friday.

Wednesday, Peter George threw a breakfast meeting for Reg and I. One hundred and thirty men, many of them prominent Cape Town citizens, attended. Peter, a staunch Born Again Christian, runs this Christian fellowship breakfast meeting every week, often bringing in guest speakers. It was very well orchestrated, GATA raised some money and we turned a few eyebrows about the real gold market of today.

When we returned to INDABA conference, there was a buzz about the ad. As someone told me, "that is just not done around here; one does not take on the establishment in that kind of way."

Later that day, Reg and I met with Bernard Swanepoel, Harmony Gold CEO, and Ferdi Dippenauer, one of their senior executives. That meeting also went well, with our dialogue to continue in the near future.

The rest of the day was spent networking and socializing. It was good to see Peter Bradford, President and C.E.O. of Golden Star Resources, once again. All is going very well with GSR as Peter was on his way to Ghana to continue to build Golden Star's gold production in that African nation.

Cape Talk radio kicked off Thursday morning. The DJ knew more about what was going on in gold than most gold analysts here in the States. Also joining in was the top money manager in South Africa, who also had attended Peter George's breakfast for us. On the air he stated that he felt that "the Howe/GATA Complaint had a better than 50/50 chance of succeeding."

Between press interviews during the day, I listened to David Hale, the Keynote Speaker for the conference. It was a very provocative presentation as he related why Zimbabwe is falling apart, will run very short of food in the months to come and that only "political revolution" can save an all out disaster in that imploding country.

David, who was also the Keynote Speaker at the Australian Gold Conference, told me after his speech that he had read GATA's ad and would like to talk to me about it in the near future. He was not unaware of the issue as he is a long time acquaintance of Frank Veneroso, a member of the GATA delegation that met with Speaker of the House of Reprentatives, Denny Hastert, on May 10, 2000.

Reg then took off back to Boston to work on his Complaint.

Friday, gears were shifted, as I had breakfast with Ms. Phumzile Mlambo Ngcuka, Minister of Ministry of Minerals and Energy, at "The Nelly." Also at the breakfast was Thabo Mafoko of the Department of Minerals and Energy International Relations. The meeting went very well. Thabo conferred with Ms. Ngcuka and before I knew it another meeting was set up in Pretoria for me to meet with senior Reserve Bank officials and other Department of Minerals and Energy staff.

Friday night it was a farewell dinner with Peter George and his charming wife, Allison, and then a lunch on Saturday with another feisty South African firebrand, Margaret Legum, Board Member of the S A New Economics Foundation. Margaret has her economics degree from Cambridge and would like to help anyway she can. Not afraid to take on the establishment, Margaret and her husband were exiled from South Africa for 30 years for fighting against Apartheid.

Back to Johannesburg I went for an early Monday morning meeting with the National Union of Mineworkers. Attending the meeting were Mr. S. Zokwana, President: Mr. G. Mantashe, General Secretary, Mr. A. Palane, Deputy General Secretary and Gino Govender, Co-Ordinator Strategy Unit.

No one is more directly effected by the manipulation of the gold market than the South African miners as 170,000 have been laid off. Each one of these miners supports 11 to 12 others according to Bheki Sibiya, also President of the Black Managment Forum.

Obviously, there is no way that the mining union executives could know if GATA's claims are correct, but what I stressed was that the new Treasury Secretary, Paul O'Neil, has to make a decision to either remain a Defendant in the case or conduct a gold market inquiry of his own. Of all the Defendants, only the new Republican Treasury Secretary was not party to the charges when Reg Howe filed his Complaint. The Bush Administration must decide whether to continue the fraud or let The Gold Cartel fend for themselves. Like the other Defendants, the Treasury must send a written response to the charges to the judge assigned to the case in Massachusetts Federal District Court by March 15.

GATA believes that the new US Treasury knows the score and must decide what course of action to take. Pressure from aggrieved South African blacks can only be constructive to guiding them in the right direction. As it is, the Republicans only garnered 10% of the black vote in the U.S., the lowest since the days of Barry Goldwater.

If the Republicans could rightly expose what the Clinton Administration was really doing to the Black led African governments and the people of Southern Africa, it could dramatically change perceptions of who the real friends of the black community in Africa really are.

The National Union of Mineworkers in South Africa helped to block the proposed IMF gold sales with their protest. They joined the US Congressional Republican leadership, the Democratic Congressional leadership, the Black Caucus and 36 out of 41 poor gold producing countries in doing so. Only President Clinton, Treasury Secretaries Rubin and Summers, the IMF and the bullion banks were for it. I explained to the mining union that it was not debt relief for the poor they were after. It was the 3000 tonnes of IMF gold they wanted to flood the physical gold market with to keep gold prices low for years to come. When that attempt failed, they called on the British to auction off half of their gold reserves.

President Zokwana told me that he and other Union officials would study the matter very seriously.

From there my waiting driver sped off to Pretoria, the country's Capitol. There I met with Lambertus Van Zyl, General Manager (Hoofbestuurder) of the International Banking Department and Alan R.H. Colburn (Assistant Hoofbestuurder) of the South African Reserve Bank and 7 staff members/executives of the Department of Minerals and Energy in their Board Room.

The room was something else - large with a huge oval desk, comfortable chairs and a mike for each attendee. Then there were all these screens at the end of the oval to present visual material. The Reserve Bank officials said very little but took copious notes.

I reiterated the same theme as I did with the Mine Union executives except with an additional twist. I told them that they could find out themselves about our claims by asking the right questions to the right people. I suggested that after reading Howe's Complaint, the Gold Derivative Banking Crisis document and James Turk's 'Smoking Gun' that they attempt to quietly get the answers to the following questions:

1. To the IMF: Is it possible that IMF gold is reaching the physical gold market in any way, shape, form or fashion? Does the IMF have gold on deposit at the Bank for International Settlements? If so, how much? Is any IMF gold deposited at the BIS or IMF "earmarked gold" at the New York Fed entering the physical gold market at this point in time?

2. To the BIS: Are you lending gold on behalf of the IMF in any way?

3. To the bullion banks: According to the statistics of the BIS and the Office of The Controller of The Currency in the U. S., the notional value of gold derivatives exploded on the books of Chase Manhattan Corp., J.P Morgan & Co. Inc., Citigroup, Inc and Deutsche Bank from June 1999 through January 2000, while remaining steady at other bullion banks. How do these Defendants in the Howe/GATA Complaint account for this gold derivative build up, which is quite large in relation to their capital?

4. To Secretary O’Neil at the U.S. Treasury: Various Treasury officials have denied any involvement in the gold market by the Exchange Stabilization Fund. However, beginning in 1996 there is a pattern of discrepancies between the Fed’s gold certificate account and the quarterly U. S. Treasury statements (that include the ESF gold figures) which should be the same. At the end of 1999, the ESF showed a record $41 million, or approximately 30 tonnes, excess over the gold certificate account. Could you please reconcile the discrepancy since the Clinton Administration reported to Congress that it did not engage in any currency interventions from 1998 through March 2000? Can you explain during this period how it is that the ESF reported profits that generally coincided with periods of falling gold prices while its losses generally coincided with rising gold prices?

5. To Bank of England Governor Edward George: Did you make a statement to Nicholas J. Morrell, Chief Executive of Lonmin Pic, following the price rise after the Washington Accord that essentially said the following?:

We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, to manage it. It was very difficult to get the gold price under control but we have now succeeded. The U.S. Fed was very active in getting the gold price down. So was the U.K.

Alan Greenspan of the Fed and Paul O’Neil, new U.S. Treasury Secretary, should be asked whether the U.S. intervened in the gold market in any way following the sharp price rise after the Washington Accord.

6. To J.P. Morgan Chase and Citibank: Has any facet of the U.S Treasury or U.S. Fed guaranteed any gold derivative positions on your books against a loss?

7. To Randall Oliphant, Chief Executive Officer of Barrick Gold: Are you restricted in any way from covering certain derivative positions as a result of any agreements with any bullion banks such as J.P Morgan?

At the end of the 75 minute presentation, they convened and then came back to tell me that they would take the matter very seriously and wanted to know what they felt would be the latest they should be in touch with the U.S Treasury should they decide to do so?

It was a big plus to distribute copies of all the many letters from U.S. Congressmen and Senators that have raised the gold market manipulation issue with the Clinton Administration. Having them with me helped considerably in bolstering GATA's credibility with the people I met with. All GATA supporters should know that your efforts are paying off. GATA Treasurer/Secretary Chris Powell and I thank you all.

From Pretoria back to Johannesburg for an interview with the South African Broadcasting Company for a story they are doing on the GATA trip to their country. The camera was rolling, so we will have to set if the story shows up on their nightly news TV broadcast.

As far as I can tell, the journey to South Africa was a winner. GATA received 10 times as much press coverage in two weeks as we have received the last two years combined. Many eyes were opened as to the truth about about today's real gold market It does not mean that we win the day overnight, but a solid foundation has been build to turn the tide.

For me personally, it was the most satisfying experience of my life. Yes, all of us would like the gold price to go up so that we can prosper, but of greater significance, is that we all have an opportunity to constructively affect the economy of half a continent. The success of our efforts will determine the fate of millions of people. It is no less than a life and death situation for many poor Africans. They desperately need injections of money to combat disease and crime.

Over and over I was told that many young blacks commit crime and have indiscriminate sex (resulting in an AIDS epidemic) because there is no hope. A soaring gold price would mean many workers all over Southern Africa would have jobs again. Hope would return. Africa could become the natural resource "Boom Continent," not the "Hopeless Continent" as Britain's Economist called it.

When GATA was first formed, I chuckled when he said "let's change the world." Amazingly, Chris was right; it is really possible that we can to a certain degree. All that need be done for that to happen is to have Reg Howe's Complaint reach the discovery stage. At that point in time, the Howe/GATA lawyers can ask the Defendants to answer our questions under oath. When that happens, the size of the huge short gold position will become known, the market will realize the GATA camp is right, savvy major investment players will start buying up physical gold, the price will soar, and it will be a brand new day.

A gold nugget can be worth three to four times the value of the gold it contains because they are so rare.
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