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Taylor Gold Review

February 11, 2001

With the price of gold at $260, the gold manipulators have succeeded in pushing the price of gold to a level not seen since just before the Washington Agreement. Given its current price, gold mining has become a most unattractive business. Accordingly, we are rating all our gold stocks as a "hold" at this point in time. If the price were to rise above $290 and hold, we would turn cautiously optimistic.

However, at this stage it appears as though the new U.S. Treasury Secretary has been willing to receive the "gold manipulation ball" on a handoff from the former Treasury Secretary and run with it. I am slightly hopeful that when the new Attorney General finally takes a look at Reginald Howe's law suit, the Bush Administration will come clean on this corrupt price rigging scheme, though frankly, given all that is politically and economically at stake, I am not very hopeful.

In fact, I have no doubt that we in fact are moving quietly, though inexorably toward a dictatorship. As freedom is snuffed out and in fact as people these days show little concern abut losing their freedom, there is little chance that we can avoid tyranny. More important than a few people missing a chance to make a lot of money and more important than thousands of jobs lost in the mining sector, what is really at stake in the Reginald Howe law suite against Mr. Greenspan and his partners in crime is freedom.

If the U.S. courts refuse to hear the Reginald Howe case in spite of the overwhelming evidence of a gold price fixing scheme, Americans serious about retaining a life free from dictatorship could not be blamed for exploring other countries in which to live. The Reginald Howe case is so basic because it will test whether policy makers and the bankers who own them have the right to fix markets while private corporations do not. Our founding fathers declared that no man is supposed to be above the law. Increasingly as we saw in the case of President Clinton, O.J. Simpson, Jessie Jackson and others, certain people are in fact above the law. It is my understanding that we should know something about the way this federal district court will handle the Reginald Howe case by mid March.


Bill Murphy and other key GATA supporters have been courageous and unrelenting in their effort to bring the gold market manipulation to light. In America where we have not had to deal much with reality during the past eight years or so, the notion that the more dollars that are printed the more valuable they should become is a ridiculous concept most market participants automatically accept. Likewise, without thinking they reject any notion that gold is being manipulated.

Not so ready to reject that concept are the folks in South Africa who are suffering an enormous cost from plummeting gold prices. So it is in South Africa that Bill Murphy and GATA is receiving a very warm reception.

This past week, the "Durban Independent" reported that GATA has been endorsed by South Africa's National Union of Mineworkers. This is one of the crucial steps toward getting that country behind the gold cause and the cause of free markets, and one of the things GATA Chairman Bill Murphy went to South Africa to accomplish. If South Africa can be persuaded to stand up for itself against the Wall Street fixers, GATA believes it will win its case against the manipulators.

Following was the article published in the "Durban Independent" last week.

"170,000 JOBS LOST IN MINING Mineworkers Union endorses GATA"

By Sandile Ngidi

February 3, 2001

The manipulation of the international gold price in the 1990s has cost close to 170,000 South African mine workers their jobs, the U.S.-based Gold Anti-Trust Action Committee (GATA) said this week.

GATA Chairman Bill Murphy said the fixing of the gold price had harmed South Africa severely, as the country was the biggest producer of gold in the world.

GATA is asking U.S. District Court in Massachusetts to test their claims that some leading U.S. investment institutions and public officials were "suppressing the gold price."

Murphy has accused the Bank for International Settlements and J.P. Morgan & Co. Inc., among others, of fixing the gold price in order to make gold a cheap source of capital.

"As long as the price of gold remains low, this is a financial bonanza to a privileged few at the expense of the many," he said.

This week the campaign got the support of South Africa's biggest mining-sector trade union. The 300,000-strong Cosatu-affiliated National Union of Mineworkers said it was time to expose "cartels in the international gold market."

Spokesman Mr. Gino Govender said the sharp decline in the international price of gold in the 1990s had caused a mining crisis in the country.

Consequently, mining crisis summits were held in 1998 and 1999 in order to "arrest retrenchments in the mining sector."

Murphy said mine workers in Africa and on other continents had lost jobs "in the thousands."

It was also proving increasingly hard for the local economy to get the boost it needed, he said.

"Statistics reveal that diseases associated with poverty and lack of education are once again increasing at a frightening rate," he said.

At the time of going to press, attempts at getting comments from the two financial institutions had proved futile.



The following Reuters story appeared last week concerning one of the lawsuits against the Bank for International Settlements. GATA and Reg Howe aren't the only ones to think that something is wrong here. Some very big people do too.

An hour ago I spoke with GATA Chairman Bill Murphy, who is in Cape Town, South Africa, continuing his meetings with gold industry people on the eve of the Indaba 2001 Africa mining conference.

"U.S. lawsuit seeks higher price for BIS shareholders"

By Cal Mankowski

NEW YORK, Feb 5 (Reuters) -- A U.S. mutual fund group is joining in an international legal fray over the terms of a compulsory buyout of shareholders in the Bank for International Settlements.

Basel, Switzerland-based BIS, often described as the bank for the world's central banks, voted on Jan. 8 to buy back all the shares that had been in public hands since the 1930s, representing about 13.73 percent of the total capital.

First Eagle SoGen Inc., which holds 9,085 BIS shares, claims shareholders have been subjected to a "squeeze-out" at a price that is unfairly low and is turning to the courts to try to force a higher price.

The shares were valued at $90 million based on the price, set by the BIS, of 16,000 Swiss francs per share.

But New York-based First Eagle, with 130,000 investors in three funds that own the shares, says they may be worth twice that amount and has not surrendered its shares.

First Eagle's stake represents about 12.5 percent of the total public shares of BIS, which together are worth about $700 million using the price of 16,000 Swiss francs.

"We have not surrendered our shares and we are urging every other shareholder in the world not to surrender their shares," Charles de Vaulx, co-manager of the First Eagle SoGen Funds, said in an interview.

The BIS, which is owned mostly by central banks, says the public shares were canceled last month and the BIS refers in court papers to its adversaries as "former" shareholders.

"The transaction was completed Jan. 8," said a source familiar with the BIS position who requested anonymity. "What is left to be done is simply to pay people the amount of money to which they are entitled.''

But First Eagle alleges BIS has not made required disclosures under U.S. securities laws and is fighting back.

A U.S. District Court judge in New York last month denied First Eagle's request for a temporary restraining order, observing that the BIS shares are "quite unusual" and the rights of shareholders are "severely limited."

First Eagle has appealed the ruling and a hearing before the U.S. Court of Appeals for the Second Circuit in New York is scheduled for early March. The appeals court recently denied a request for an injunction pending the appeal.

The terms of the buyout also are being fought in Europe, where Deminor, a French corporate governance consultancy firm, last month said it had started court action against BIS advisers J.P. Morgan and auditors Arthur Andersen. The 16,000 Swiss francs price was based on a J.P. Morgan evaluation reviewed and approved by the Andersen firm.

Deminor said it was taking the U.S. investment bank and the audit firm to court in Paris in a bid to get the terms of the controversial buyback reassessed independently.

Unlike European lawsuits, however, the First Eagle suit names the BIS as a defendant.

First Eagle also takes issue with an arbitration procedure that the BIS says is available.

"What the bank is saying is that you have to go to an arbitration panel tribunal where all five members of the tribunal are chosen by the national governments of the central banks," said a source familiar with the First Eagle case.

De Vaulx said First Eagle would welcome an appraiser it considers to be neutral.

The 9,085 BIS shares in question are held in various amounts in the First Eagle SoGen Global Fund, the First Eagle SoGen Overseas Fund, and the First Eagle SoGen Gold Fund. The investment firm said it has been buying the BIS stock for the funds since the mid-1980's and shows a compounded annual return on the investment of about 15 percent, including the buyout price and the dividends paid over the years. The shares represent about 4 percent of the Global Fund, 6 percent for the Overseas Fund, and 7 percent for the Gold Fund.

The 16,000 Swiss francs price for each share determined by BIS is equivalent to about $9,773 per share based on Monday's exchange rate. The First Eagle SoGen Funds have been part of New York investment managers Arnhold and S. Bleichroeder Advisers Inc. since January 2000.

With gold stolen by Conquistador Francisco Pizarro from the Inca Empire in 1532, Spain financed its conquest of Europe.
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