(Washington, D.C. - September 30, 1999) - "A fundamental change took place in the gold market this week because of actions taken by the International Monetary Fund (IMF) and a group of central bankers. These actions should be applauded and any pressure to reverse them should be resisted. The sharp increase in the gold price is welcome news to the gold industry and is expected to range higher this year," said John Lutley, President of The Gold Institute, a Washington, D.C.-based industry association.

For the better part of 1999, the gold industry has focused efforts on combating the dual threat of open-ended central bank and International Monetary Fund (IMF) sales on the open market. "The gold industry has been held hostage by the threat of these sales which, quite frankly, frightened many investors about the very realistic possibility of an over-supply of gold on the market," added Lutley. This perception encouraged speculators to "short" the market using inexpensive leased gold, driving the price even lower.

The September 26th statement from the European Central Bank, as well as the central banks of 15 other countries, clarified their intentions to limit their sales to 400 tons per year for the next five years. They also announced they would limit the amount of gold lending in the future which would reduce considerably the speculative activity. These actions sharply boosted gold prices this week, calming investor and gold industry analyst fears while restoring faith in the precious metal. In addition, the IMF announced its intention to revalue up to 14 million ounces of gold at current market prices, scrapping its initial plan to sell 10 million ounces on the open market to fund debt relief efforts for impoverished nations. The IMF gold sale proposal was opposed by an overwhelming number of key U.S. Congressional leaders on a bipartisan basis, who ultimately had veto authority over the proposal.

"We applaud central bank and IMF statements in regard to the five-year moratorium and the revaluation of gold targeted for debt relief," Lutley emphasized. "The gold industry feels somewhat reassured that these institutions have realized that their previous activities in potential uncontrolled gold sales and leasings have had unintended consequences.

"However, we are concerned with some recent news accounts and discussions with market participants that some speculators may be trying to exert pressure on central banks to reverse their recent decision, principally as a result of being caught short in the market," said Lutley.

"Not only did speculation drive down the value of one of the central banker's most important assets, but it also had severe adverse effects on employment and the economies of many poor gold producing countries, and also in important gold producing developing nations such as South Africa, Peru and Indonesia. To see that happen all over again, would be an economic and humanitarian travesty," Lutley added.

"Right now, presuming the decision by the central banks holds, it is now likely that, for at least the next five years, the gold market will trade on basic fundamentals. This will allow mining companies to concentrate on improving their operations free of the speculative pressures that have weighed on them in the past two years," Lutley concluded.

The Gold Institute is a nonprofit international industry association representing leading gold producers and refiners, bullion suppliers and manufacturers.