Ref: Central Bank of KUWAIT's Decision to Lend Gold

October 23, 1999

AN OPEN LETTER TO:

His Excellency The Governor
Sheikh Salem Abdul-Aziz al-Sabah
Central Bank of KUWAIT

Ref: Central Bank of KUWAIT's decision to lend gold

Your Excellency:

The following news has just been made public:

Kuwait--Oct 21--Kuwait's Central Bank announced today that it had decided to deposit 79 tonnes of its gold reserves with "reputable" international finance institutions. Central bank governor Sheikh Salem Abdul-Aziz al-Sabah said the bank would invest its gold through limited-term deposits, without giving up the ownership of the reserves.

This is very sad and disturbing news for a number of reasons, which concern KUWAIT, its currency and the Central Bank of KUWAIT (CBK). We feel Your Excellency has been sorely ill-advised. And given time the dire ramifications of the ill-fated decision will inevitably taint KUWAIT's heretofore impeccable financial reputation.

Your Excellency, please allow us to share the following information.

Since early 1996 the international gold market ceased to be a purely free market, subject only to supply/demand dynamics. There is little doubt external forces have been artificially affecting the gold price during the last four years. The cardinal goals in manipulating the price of gold have been - and remain - to further inflate the Wall Street Bubble and allow for the 'exportation' of U.S. inflation.

To achieve this purpose various Central Banks have collectively engaged in what they euphemistically call "gold leasing or "gold loans." HOWEVER, recent reports by qualified financial experts published on the Internet unequivocally prove a "gold lease" is not a LOAN, but rather a Gold Sale with little or no hope of return of the "leased" bullion.

Testament to the realization of this dangerous Central Bank practice was the announcement by 15 European Central Banks on September 26, 1999. They informed the world annual gold sales would be severely curtailed, and all gold leasing stopped during the next five years.

Your Excellency, please allow us to present various examples of expert analysis and reports for the review and evaluation by the CBK's economists and financial advisors. Indubitably, they too will be forced to conclude "gold leasing" is tantamount to a GOLD SALE - which puts into dire jeopardy the financial reputation of the country indulging in these speculative operations, and indeed runs the very real risk of undermining the value of its own currency.

"GOLD LEASING" REPORTS

A Letter to the Federal Reserve and the Treasury Department
http://www.gold-eagle.com/gold_digest/butler414.html

An Open Letter to the Securities and Exchange Commission
http://www.gold-eagle.com/gold_digest_99/butler050699.html

THE OTHER SIDE OF LEASING
http://www.gold-eagle.com/gold_digest_99/butler050599.html

PONZI REVISTITED
http://www.gold-eagle.com/gold_digest_98/butler121798.html

MISSION: TO THE MOON
http://www.gold-eagle.com/gold_digest_99/butler100499.html

What went wrong with Central Banks' Gold Leasing?
http://www.gold-eagle.com/editorials_99/madhok081999.html

Hedging or Speculation?
http://www.gold-eagle.com/editorials_99/madhok101999.html

One departing thought. With utmost respect to Your Excellency, I am obliged to ask the embarrassing question: What are the grievous repercussions to KUWAIT, its currency and the financial reputation of your esteemed nation in the event KUWAIT gold is not recoverable, because it was sold to a third party?

With greatest admiration for Your Excellency we wish you good health and best regards,

I.M. Vronsky
Editor & Partner - GOLD-EAGLE

21 October 1999

copies sent to:
CBK website: http://www.cbk.gov.kw
CBK contact: cbk@cbk.gov.kw

Founder of Gold-Eagle in January 1997.  Vronsky has over 42 years’ experience in the international investment world, having cut his financial teeth in Wall Street as a financial analyst with White Weld. Vronsky speaks three languages with indifference: English, Spanish and Brazilian Portuguese.  His education includes a degree in Petroleum Engineering from the University of Oklahoma, a Liberal Arts degree from Hartnell College and a MBA in International Business Administration from UCLA – qualifying as Phi Beta Kappa and Tau Beta Pi for high scholastic achievements.  Vronsky believes gold and silver will soon be recognized as legal tender in all 50 US states…and many countries worldwide.  You may reach I. M Vronsky at: vronsky@gold-eagle.com and/or vronsky@bellsouth.net

The California Gold Rush began on January 24, 1848 when gold was found by James W. Marshall at Sutter's Mill in Coloma.

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