Reports from the GATA Army are that the Blanchard lawsuit against Barrick Gold and Morgan Chase is getting excellent mention on Canadian, European, and Asian television business news programs and may be affecting the market. A Reuters story including Barrick's denial of wrongdoing is appended here.
CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc.
TORONTO, Dec 18 (Reuters) -- Blanchard and Co., a U.S. gold and coin dealer, said on Wednesday it had filed an anti-trust lawsuit against Canadian miner Barrick Gold Corp. and J.P. Morgan Chase & Co. for manipulating the gold price, but Barrick dismissed the claims as "ludicrous."
New Orleans-based Blanchard said in a statement distributed by Business Wire that its anti-trust suit accused Barrick, the world's second-largest gold producer, and U.S. financial services firm J.P Morgan Chase of making $2 billion in short-selling profits by suppressing the price at the expense of investors.
Privately held Blanchard said in the statement that it was seeking in legal papers filed to the U.S District Court for the Eastern District of Louisiana to end the trading agreements between Barrick and J.P. Morgan Chase, and other bullion banks.
It is also seeking payment to Blanchard's clients for losses caused by the alleged price manipulation.
Toronto-based Barrick said the allegations were "totally without merit" and said it would vigorously defend itself and pursue all of its legal rights.
"Although Barrick has not had an opportunity to review the complaint in detail, the press release contains numerous factual inaccuracies and defamatory statements," a Barrick spokesman said, reading from a prepared statement.
Shares in Barrick, which is expected to produce 5.7 million ounces of gold in 2002, were down as much as 89 Canadian cents after Blanchard's statement, but rebounded to close down 20 Canadian cents at C$24.45 in Toronto.
Blanchard's statement said the lawsuit alleges that in the past five years Barrick and J.P. Morgan Chase injected millions of additional ounces of gold into the market, or several times more than the annual production of every gold mine in South Africa, the world's biggest gold producer.
"Since the end of 1987, when the collaboration between Barrick and J.P Morgan Chase began, the growth of global income and wealth would have lifted the gold price to approximately $740 (an ounce) if the price had been able to respond to the normal laws of supply and demand," Blanchard's chief executive, Donald Doyle, said in the statement.
"If gold had kept pace with inflation, the price today would be approximately $760."
Blanchard said its suit claimed that by using privately negotiated derivative contracts and concealing additional billions of dollars worth of physical gold with off balance sheet accounting, Barrick made it virtually impossible for gold analysts and investors to determine the size and the market impact of its trading position.
The lawsuit further alleges that J.P Morgan Chase financed Barrick's repeated short selling with advantageous terms not available to others, including deferred repayments and no margin calls, Blanchard said.
