``Gold as Theatre'' by Tocqueville's Hathaway Bolsters GATA's Credibility.

Business Editors

DALLAS--(BUSINESS WIRE)--Aug. 27, 2001

Gold fund manager John Hathaway has endorsed the findings of the Gold Anti-Trust Action Committee (GATA) that the price of gold is being suppressed by the U.S. government.

Hathaway's endorsement came in a "press release" dated August 23 and titled "Gold as Theater," posted at the Internet site of the Tocqueville Funds:

http://www.tocquevillefunds.com/press/archives.php?id=22

Hathaway manages the Tocqueville Gold Fund.

GATA Chairman Bill Murphy welcomed Hathaway's statement. "It enhances GATA's credibility immensely," Murphy said. "John Hathaway may be the most respected gold fund manager in the world. Now that he has been persuaded that the U.S. government is rigging the gold market, others may be persuaded too. And just as important, GATA may be closer to showing the world that there isn't a surplus of gold but a great shortage disguised only by massive central bank leasing and purposely deceptive gold swapping operations."

In "Gold as Theater," Hathaway writes:

"There is growing body of credible evidence that the U.S. government and others may have been manipulating the metal price for some time. A few years ago such claims were unsubstantiated and lacked credibility, but recently some weighty evidence is beginning to accumulate. Credit for the heavy lifting on discovery of possible price-fixing activity goes to Bill Murphy, Reginald Howe, James Turk, and their associates. A useful source to learn more are the two Gold Anti-Trust Action Committee Web sites: www.lemetropolecafe.com and www.gata.org.

"The Exchange Stabilization Fund, controlled by the U.S. Treasury and essentially unaccountable to Congress or the American people, appears to be a key instrument for intervention. It appears that U.S. gold reserves have been swapped or in some way encumbered. The basis for this supposition can be found in the ESF financial statements themselves.

"According to James Turk in his Freemarket Gold & Money Report (www.fgmr.com) dated August 13, 2001, SDR Certificates held by the ESF declined from a peak level of 10.2 billion to 2.2 billion as of year end 2000. A precipitous decline from 9.2 billion as of year-end 1998 to current levels coincided with an accelerated decline in the gold price that began in May 1999 (the announcement of British gold auction) and the breakout of the trade-weighted dollar index from a multi-year trading range.

"If the U.S. and other governments have been actively involved in manipulating the gold market, there is far greater upside potential for the gold price than I had previously imagined. The U.S. government may have already expended considerable resources to hold the gold price in check. Public, press, and congressional scrutiny of these matters should commence in earnest."

GATA Chairman Murphy notes that GATA consultant Reginald H. Howe has located an academic essay co-authored by Lawrence Summers, former U.S. treasury secretary and incoming president of Harvard University. The article, "Gibson's Paradox and the Gold Standard," was published in June 1988 in the Journal of Political Economy. In this essay Summers observed that in a "truly free market gold prices will move inversely to real long-term rates, falling when rates rise and rising when they fall."

But, as Howe writes at www.GoldenSextant.com about the Summers essay:

"This relationship ended after 1995 during Summers' tenure at the Treasury Department. During this period, as real interest rates (30-year T-bond less the CPI rate) have declined from the 4 percent level to near 2 percent, but gold prices have fallen from $400/oz. to around $270 rather than rising toward the $500 level as Gibson's paradox and the model of it constructed by Summers indicates they should have." Howe goes on to observe "The low real long-term interest rates of the past few years may have been engineered with far more sophistication than those of a generation ago, including the coordinated and heavy use of both gold and interest rate derivatives."

Howe's observations are supported by the work of GATA consultant Mike Bolser in a report entitled, "Preemptive Selling in COMEX Gold," which can be viewed at:

http://www.goldensextant.com/commentaryBA.html#anchor65565

Bolser notes a standard deviation selling event on Comex in 1996 that "would be expected to happen at random only once in 833 years of Comex activity (10,000 periods)." Bolser goes on to say: "The implications of such an event are ominous. These extreme selling events started during the Clinton administration. Perhaps not coincidentally, Event A occurred right around the time that the Federal Reserve, after a lapse of 64 years, assumed the two American seats on the board of the Bank of International Settlements" -- an event GATA maintains is central to the U.S. government's suppression of the gold price.

Murphy says: "Each week now produces more evidence that the United States has been a part of a scheme to manipulate the price of gold. This scheme is confirmed by the January 31, 1995, minutes of the Federal Reserve's Open Market Committee, at which gold swaps were attributed to the Exchange Stabilization Fund."