Clarify U.S. Policy on Gold and Gold Accounting

Dear Mr. Secretary:

I am writing to ask you as Secretary of the Treasury to clarify the public confusion surrounding the United States Government’s handling of its gold reserves. In the spring of 2000 GATA or Gold Anti-Trust Action presented a 120 page document to the Senate Banking Committee and members of Congress. In this comprehensive document GATA accused the U.S. government and a number of Wall Street bullion banks of manipulating the price of gold for the purpose of maintaining a strong dollar, protecting the huge gold short positions of certain bullion banks (estimated to be as high as 15 000 tonnes), and masking the rate of inflation.

The GATA document is titled Gold Derivative Banking Crisis. GATA alleges that a significant amount of the gold reserves of the United States have been sold without public knowledge by the Exchange Stabilization Fund to keep the supply of gold strong and thus to keep the price of gold down.

If what GATA alleges is true, any investor buying gold or gold stocks is buying into a rigged market. If the allegations are true, many investors have lost money through no fault of their own because of alleged, illegal market manipulation.

Again, if true, GATA has also uncovered an enormous social injustice as a consequence of the alleged manipulation. I am referring to the devastation of the economy of South Africa. Nearly two hundred thousand gold mine workers are unemployed because the cost of producing gold for many mines is higher than the market price of gold and mines have shut down. A significant unemployment multiplier effect means thousands more workers in the gold mining industry are also out of work. South Africa is a country with a poor health care system and an AIDS epidemic.

In recent months there has been even more confusion about the U.S. Government’s handling of its gold reserves. These latest developments appear to make the gold picture even less transparent. Since the beginning of 2001, 20% of the U.S. gold reserves stored at West Point have been reclassified from “U.S. Gold Bullion” to “Custodial Reserves.” And more recently the U.S. Treasury has lumped all gold into one classification referred to as “Deep Storage.” The GATA allegations and the gold reclassifications have many people asking serious questions about U.S. policy regarding gold.

Sincerely,
The Undersigned