Hearing Date Set for GATA's Lawsuit Vs. Greenspan, Summers, and Bullion Banks.

Business Editors

DALLAS--(BUSINESS WIRE)--Aug. 13, 2001

Judge Reginald Lindsay of U.S. District Court in Boston has scheduled for 3:30 p.m. Tuesday, October 9, 2001, a hearing on the defendants' motion to dismiss the lawsuit brought by a consultant for the Gold Anti-Trust Action Committee, Reginald H. Howe, against the Bank for International Settlements, the U.S. Federal Reserve and Treasury Department, and several bullion banks.

The lawsuit alleges collusion by the U.S. government, the BIS, and the bullion banks to suppress the price of gold.

The underlying issue at the hearing Oct. 9, according to Howe, will be whether the U.S. Constitution and federal law may be enforced in a federal court action challenging the authority of former Treasury Secretary Lawrence Summers and other American officials, working in part through the Bank for International Settlements, to conduct surreptitious gold price-fixing operations.

"Wonderful news!" says GATA Chairman Bill Murphy, speaking from GATA's headquarters in Dallas.

"Recent exposes by Reg Howe and James Turk, which can be read at www.GATA.org, are devastating evidence that the plaintiffs have been manipulating the gold price for the benefit of the few to the detriment of so many, including the poor sub-Saharan gold producing countries in Africa," Murphy says.

In an essay published this week, "Gibson's Paradox Revisited: Professor Summers Analyzes Gold Prices," Howe notes that Lawrence Summers, the new president of Harvard University, co-authored with Robert B. Barsky and then Harvard Professor Nathaniel Ropes an article entitled "Gibson's Paradox and the Gold Standard" in the Journal of Political Economy (vol. 96, June 1988, pp. 528-550). The article, which appears to draw heavily on a 1985 working paper of the same title by the same authors, reveals Summers' expertise regarding gold, gold mining, and the connections among gold prices, interest rates, and inflation.

Howe notes in his essay: "The unusual and sharp divergence of real long-term interest rates from inverted gold prices that began in 1995 suggests that Mr. Summers found an opportunity to do some further applied research on these matters during his tenure at the Treasury."

Howe goes on:

"Around 1995, real long-term interest rates and inverted gold prices began a period of sharp and increasing divergence that has continued to the present time. During this period, as real rates have declined from the 4 percent level to near 2 percent, 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 Barsky and Summers indicates they should have."

"Professor Summers was the youngest tenured professor in Harvard's modern history. On Friday, October 12, 2001, in outdoor ceremonies in Tercentenary Theatre, he will be formally installed as its 27th president, entrusted with the job of leading the nation's oldest university -- where "Veritas" is the motto -- into the new millennium. Three days earlier, in Courtroom No. 11 of the new U.S. Courthouse on Boston Harbor, the search for the truth about his interim service in the highest positions at the U.S. Treasury will resume."

The defendants in the GATA/Howe lawsuit are: the Bank for International Settlements; Alan Greenspan, chairman of the Board of Governors of the U.S. Federal Reserve System and a director of the BIS; William J. McDonough, president of the Federal Reserve Bank of New York and a director of the BIS; five major bullion banks, J.P. Morgan & Co., Chase Manhattan Corp., Citigroup Inc., Goldman Sachs Group Inc., and Deutsche Bank; and Lawrence H. Summers, former secretary of the treasury, who by law exercised control over the U.S. Exchange Stabilization Fund, subject only to approval by the president.