United States SECURITIES
AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM 10-Q (Mark One) xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2010 OR  ̈TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the transition period fromto  Commission
file number:001-31819 GOLD RESERVE INC. (Exact name of Registrant as specified in its charter) Yukon Territory, Canada                                                                                                       NA (Jurisdiction of incorporation
or organization)                                                                     (I.R.S.
Employer Identification No.)  926 West Sprague Avenue,
  Suite 200, Spokane, Washington                                                              99201 (Address of
principal executive offices)                                                                                         Zip
Code (509) 623-1500 (Registrant’s Telephone, including area code)  Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.xYes ̈No Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate Website, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or
for such shorter period that the registrant was required to submit and post
such files).xYes ̈No Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer or a
smaller reporting company. See definitions of “large accelerated filer, “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large
accelerated filer ̈Accelerated filer ̈Non-accelerated
filerxSmaller reporting company ̈ Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). ̈YesxNo As of November 9, 2010, 57,858,463 Class A common
shares, no par value per share, and 961 Class B common shares, no par value per
share, were issued and outstanding.


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Item
1. Financial Statements (Unaudited)


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CONSOLIDATED BALANCE SHEETS September 30, 2010(unaudited) September 30,            December 31, U.S. Dollars                                                                                                                             2010                             2009
 ASSETS Current Assets: Cash and cash equivalents (Note 4)                                                                                $        55,440,670            $      60,962,813 Marketable debt securities (Note 5)                                                                                         10,032,392                    10,175,020 Marketable equity securities (Note 6)                                                                                        2,020,383                         598,825 Deposits, advances and other                                                                                                       699,789                         566,483
 Total current assets                                                                                                                  68,193,234                    72,303,141 Property, plant and equipment, net (Note 9)                                                                          30,022,617                    38,122,102 Restricted cash (Note 13)                                                                                                          8,995,701                      9,489,777 Totalassets$    107,211,552            $    119,915,020
 LIABILITIES Current Liabilities: Accounts payable and accrued expenses                                                                         $        2,681,385            $        3,790,003 Accrued interest                                                                                                                        1,641,849                         234,550
 Total current liabilities                                                                                                               4,323,234                      4,024,553  Convertible notes (Note 16)                                                                                                    96,128,728                    93,693,168 Total liabilities                                                                                                                       100,451,962                    97,717,721
  Noncontrolling interest                                                                                                              2,275,026                      2,279,699  Measurement uncertainty (Note 1) Commitments and contingencies (Notes 11, 13)  SHAREHOLDERS' EQUITY Serial preferred stock, without par value, none issued                                                                                                                 Common shares and equity units, without par value (Note 15)                                             248,239,008                  247,905,231 Equity component of convertible notes (Note 16)                                                                   28,652,785                    28,652,785 Less common shares held by affiliates                                                                                        (636,267)                      (636,267) Stock options (Note 11)                                                                                                           10,077,910                    10,014,136 Accumulated deficit                                                                                                              (282,272,209)               (265,630,369) Accumulated other comprehensive income (loss)                                                                         534,028                        (277,225) KSOP debt (Note 10)                                                                                                                  (110,691)                      (110,691)
 Total shareholders' equity                                                                                                          4,484,564                    19,917,600 Total liabilities and shareholders' equity                                                                          $    107,211,552            $    119,915,020
 The accompanying notes are an integral part of the consolidated financial statements. Approved by the Board of Directors: s/Chris D. Mikkelsens/Patrick D. McChesney


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CONSOLIDATED STATEMENTS OF OPERATIONS For the Three and Nine Months Ended September 30, 2010 and 2009(unaudited) Three Months EndedNine Months Ended U.S. Dollars                                                                     2010                         2009                       2010                     2009
 OTHER INCOME Interest                                                                        $        62,748            $       74,672          $       191,285              $     221,924 Gain on extinguishment of debt                                                                                                                                      601,936 Gain on disposition of marketable securities                        42,042                   285,362                   148,593                  2,139,345 Gain on sale of equipment                                                    36,633                                                 406,677                                 Foreign currency (loss) gain                                                (56,181)                    46,779                     88,105                        (4,142)
 85,242                    406,813                   834,660                  2,959,063 EXPENSES Corporate general and administrative                                  729,920                1,147,667                2,511,437                  3,668,635 Venezuelan operations                                                        327,830                   686,147                1,204,481                  2,152,968 Equipment holding costs                                                    305,979                     12,500                   784,968                       75,458 Corporate communications                                                 101,124                   195,166                   363,415                     599,617 Legal and accounting                                                             81,148                   222,286                   372,810                  1,292,225 Loss on sale of equipment                                                                             3,423,544                                                3,423,544 Arbitration (Note 3)                                                        3,437,287                   260,771                5,861,225                     260,771 Takeover defense (Note 17)                                                                               23,804                                                1,383,002 4,983,288                5,971,885              11,098,336                12,856,220
 Loss before interest expense and income tax                                                             (4,898,046)             (5,565,072)            (10,263,676)              (9,897,157)
  Interest expense                                                             (2,246,755)                                            (6,654,770)                               Loss before income tax                                                  (7,144,801)              (5,565,072)           (16,918,446)               (9,897,157)  Income tax benefit (expense)                                              213,964                       1,198                   276,606                   (165,479)
 Net loss for the period                                                   $(6,930,837)           $(5,563,874)       $ (16,641,840)          $(10,062,636)
  Net loss per share, basic and diluted                             $       (0.12)              $     (0.10)           $           (0.29)             $        (0.18)
  Weighted average common shares outstanding                                                      57,806,689              57,421,516              57,700,834                57,191,673
 The accompanying notes are an integral part of the consolidated financial statements.


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CONSOLIDATED STATEMENTS OF DEFICIT For the Nine Months Ended September 30, 2010 and 2009(unaudited)  U.S. Dollars
 Deficit, December 31, 2009                                                                                                                                  $   (265,630,369) Net loss for the period                                                                                                                                                 (16,641,840) Deficit, September 30, 2010                                                                                                                                 $   (282,272,209)
  Deficit, December 31, 2008                                                                                                                                  $   (100,180,541) Net loss for the period                                                                                                                                                 (10,062,636) Deficit, September 30, 2009                                                                                                                                 $   (110,243,177)
      CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS For the Three and Nine Months Ended September 30, 2010 and 2009(unaudited)  Three Months EndedNine Months Ended U.S. Dollars                                                                     2010                     20092010                        2009
 Net loss for the period                                                $ (6,930,837)     $    (5,563,874)         $(16,641,840)          $ (10,062,636) Other comprehensive income, net of tax: Unrealized gain on marketable securities                         462,576                 647,823                   959,846                  1,599,245 Adjustment for realized gains included in net loss                                                    (42,042)              (285,362)                (148,593)                (2,139,345) 
 Other comprehensive income (loss)                                   420,534                 362,461                   811,253                   (540,100) 
 Comprehensive loss for the period                             $ (6,510,303)        $ (5,201,413)        $ (15,830,587)          $ (10,602,736) 
 The accompanying notes are an integral part of the consolidated financial statements.


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CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three and Nine Months Ended September 30, 2010 and 2009(unaudited) Three Months EndedNine Months Ended U.S. Dollars                                                                                 2010                   2009                         2010                 2009
 Cash Flows from Operating Activities: Net loss for the period                                                          $ (6,930,837)          $   (5,563,874)        $ (16,641,840)   $ (10,062,636) Adjustments to reconcile net loss to net cash used by operating activities: Stock option compensation                                                        10,690                       90,657                     91,862               475,399 Depreciation                                                                               29,845                       53,548                   105,564               161,595 Gain on extinguishment of debt                                                                                                                                      (601,936) (Gain) loss on sale of equipment                                              (36,633)                 3,423,544                  (406,677)           3,423,544 Amortization of premium on marketable debt securities                                                         48,065                       48,066                   142,628                 61,650 Accretion of convertible notes                                                  842,142                                                2,435,560                           Foreign currency gain                                                                                             (142,699)                                             (34,621) Other                                                                                            8,283                        (3,715)                    (4,673)                (8,679) Net gain on disposition of marketable securities                       (42,042)                  (285,362)                (148,593)         (2,139,345) Future income tax (benefit) expense                                       (216,640)                                                 (275,106)              169,815 Shares issued for compensation                                                 26,465                                                   264,605               392,025 Changes in non-cash working capital: Net decrease (increase) in deposits and advances                    76,190                     386,049                  (133,306)              178,761 Net increase (decrease) in accounts payable and accrued expenses                                                       2,242,781                 (1,143,286)                  298,681           (4,849,511) Net cash used in operating activities                                        (3,941,691)               (3,137,072)           (14,271,295)       (12,833,939)
 Cash Flows from Investing Activities: Proceeds from disposition of marketable securities                      134,937                  2,118,614                   744,529           5,192,893 Purchase of marketable securities                                                 (99,159)                  (250,000)                (931,135)        (13,670,028) Purchase of property, plant and equipment                                    (2,552)               (6,062,697)                (500,992)       (11,818,595) Proceeds from sales of equipment                                                  50,506                  7,297,598                8,901,590            7,297,598 Decrease in restricted cash                                                                                        1,742,162                   494,076             2,490,970 Capitalized interest paid on convertible notes                                                                                                                 (2,828,841) Other                                                                                                                               (7,460)                                             (35,929) Net cash provided by (used in) investing activities                        83,732                  4,838,217                8,708,068         (13,371,932)
 Cash Flows from Financing Activities: Net proceeds from the issuance of common shares                                                                                     41,084                           Extinguishment of convertible notes                                                                                                                                   (415,254) Net cash provided by (used in) financing activities                                                                                     41,084              (415,254)
 Change in Cash and Cash Equivalents: Net increase (decrease) in cash and cash equivalents               (3,857,959)                 1,701,145               (5,522,143)       (26,621,125) Cash and cash equivalents - beginning of period                      59,298,629                63,227,897              60,962,813          91,550,167 Cash and cash equivalents - end of period                            $ 55,440,670             $ 64,929,042           $ 55,440,670       $ 64,929,042
 The accompanying notes are an integral part of the consolidated financial statements.


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Selected Notes to Consolidated Financial Statements For the Nine Months Ended September 30, 2010

and 2009(unaudited) Expressed in U.S. Dollars
 1.             The Company and Significant Accounting
Policies The Company.Gold Reserve Inc. (the “Company”) is an exploration
stage company incorporated in 1998 under the laws of the Yukon Territory, Canada, and is the successor issuer to Gold Reserve Corporation which was incorporated in
1956. The Company is engaged in the business of acquiring, exploring and
developing mining projects. From 1992 to 2009 the Company focused substantially
all of its management and financial resources on the development of the Brisas
gold and copper project located in the Kilometre 88 mining district of the
State of Bolivar in south-eastern Venezuela (which we refer to as the “Brisas
Project” or “Brisas”).  As further detailed in Note 3, we discontinued
development of the Brisas Project after it was expropriated by the Venezuelan
government and while we are pursuing our arbitration claim.  While we are
resolving our investment dispute, either through arbitration or settlement,
with Venezuela we are also seeking to invest in or acquire alternative mining
projects. The Company has no revenue producing mining operations at this time.
All amounts shown herein are expressed in U.S. dollars unless otherwise noted.
The expense categories shown in the consolidated statements of operations have
been revised on a comparative basis to better present the current operations of
the Company. The revisions had no effect
on previously reported results of operations. In
February 1999, the shareholders of Gold Reserve Corporation approved a plan of
reorganization whereby Gold Reserve Corporation became a subsidiary of Gold Reserve Inc., the successor issuer (the “Reorganization”). Generally, each shareholder of Gold Reserve Corporation received one Gold Reserve Inc. Class A common share for each common
share owned of Gold Reserve Corporation. Certain
  U.S. holders of Gold Reserve Corporation elected, for tax reasons, to receive
equity units in lieu of Gold Reserve Inc. Class A common shares. An equity unit
is comprised of one Gold Reserve Inc. Class B common share and one Gold Reserve Corporation Class B common share. Each equity unit is substantially equivalent to a
Class A common share and is immediately convertible into a Gold Reserve Inc. Class
A common share, upon compliance with certain procedures. Equity units are not
listed for trading on any stock exchange, but, subject to compliance with
applicable federal, provincial and state securities laws, may be transferred. 
Unless otherwise noted, general references to common shares of the Company
include Class A common shares and Class B common shares as a combined group. Principles of Consolidation.
The consolidated financial statements contained herein have been prepared in
accordance with accounting principles generally accepted in Canada, which as described in Note 18, differ in certain material respects from accounting
principles generally accepted in the U.S. These
consolidated financial statements include the accounts of the Company, Gold Reserve Corporation, two domestic subsidiaries, Great Basin Energies, Inc. (“Great Basin”)
and MGC Ventures Inc. (“MGC Ventures”), four Venezuelan subsidiaries, two
Barbadian subsidiaries and one Aruban subsidiary which were formed to hold the
Company’s interest in its foreign subsidiaries or for future transactions. All
subsidiaries are wholly owned with the exception of Great Basin and MGC
Ventures which are 45% and 44% owned, respectively. All intercompany accounts
and transactions have been eliminated on consolidation. The Company’s policy is
to consolidate those subsidiaries where control exists. See Note 12. Cash and Cash Equivalents.
The Company considers short-term, highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents for purposes
of reporting cash equivalents and cash flows. Cash and cash equivalents are
designated as held-for-trading and recorded at fair value.  The Company manages
the exposure of its cash and cash equivalents to credit risk by diversifying
its holdings into major Canadian and U.S. financial institutions and
corporations Exploration and Development Costs. Exploration costs incurred in locating areas of potential
mineralization are expensed as incurred. Exploration costs of properties or
working interests with specific areas of potential mineralization are
capitalized at cost pending the determination of a property’s economic
viability. Development costs of proven mining properties not yet producing are
capitalized at cost and classified as capitalized exploration costs under
property, plant and equipment. Costs related to staffing and maintenance of
offices and facilities in Venezuela are charged to operations. Property holding
costs are charged to operations during the period if no significant exploration
or development activities are being conducted on the related properties. Upon
commencement of production, capitalized exploration and development costs would
be amortized based on the estimated proven and probable reserves benefited.
Properties determined to be impaired or that are abandoned are written-down to
the estimated fair value. Carrying values do not necessarily reflect present or
future values.


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Selected Notes to Consolidated Financial Statements For the Nine Months Ended September 30, 2010

and 2009(unaudited) Expressed in U.S. Dollars
 Property, Plant and Equipment. Property, plant and equipment are recorded at cost less
accumulated depreciation. Replacements and major improvements are capitalized.
Maintenance and repairs are charged to expense as incurred. The cost and
accumulated depreciation of assets retired or sold are removed from the
accounts and any resulting gain or loss is reflected in operations.
Depreciation is provided using straight-line and accelerated methods over the
lesser of the useful life or lease term of the related asset. Interest and
financing costs incurred during the construction and development of qualifying
assets are capitalized on an interest avoidance basis. The amount capitalized
during an accounting period is determined by applying an interest rate to the
average amount of accumulated qualifying assets during the period. Adjustments
increasing the carrying value of convertible notes upon remeasurement due to a
change in estimated life are considered interest costs and are therefore
eligible for capitalization. The Company’s qualifying assets include its costs
of developing mining properties and constructing new facilities. Impairment of Long Lived Assets. The Company reviews long-lived assets for impairment whenever events
or changes in circumstances indicate that the carrying amount of the assets may
not be recoverable. If the sum of the expected future net cash flows to be
generated from the use or disposition of a long-lived asset (undiscounted and
without interest charges) is less than the carrying amount of the asset, an
impairment loss is recognized and the asset is written down to fair value. Fair
value is generally determined by discounting estimated cash flows, using quoted
market prices where available or making estimates based on the best information
available. Foreign Currency.The U.S. dollar is the Company’s functional currency.
The Company’s foreign subsidiaries are integrated foreign operations and
accordingly foreign currency amounts are translated into U.S. dollars using the
temporal method. Non-monetary assets and liabilities are translated at
historical rates, monetary assets and liabilities are translated at current
rates and revenue and expense items are translated at average exchange rates
during the reporting period, except for depreciation which is translated at
historical rates. Translation gains and losses are included in operating
expenses. Since the Company has discontinued development of the Brisas project,
the financial statement impact of transactions in the Venezuelan currency is
expected to be reduced in the future. Stock Based Compensation.
The Company uses the fair value method of accounting for stock options. The
fair value of options granted to employees is computed using the Black-Scholes
method as described in Note 11 and is expensed over the vesting period of the
option. For non-employees, the fair value of stock based compensation is
recorded as an expense over the vesting period or, if earlier, upon completion
of performance. Consideration paid for shares on exercise of share options, in
addition to the fair value attributable to stock options granted, is credited
to capital stock. Fair value of restricted stock issued as compensation is
based on the grant date market value and expensed over the vesting period. The Company also maintains the Gold Reserve Director and
Employee Retention Plan. Units granted under the plan become fully vested and
payable upon a change of control. Each Unit granted to a participant entitles
such person to receive a cash payment equal to the fair market value of one
Gold Reserve Class A Common Share (1) on the date the Unit was granted or (2)
on the date any such participant becomes entitled to payment, whichever is
greater. Income Taxes. The Company
uses the liability method of accounting for income taxes. Future tax assets and
liabilities are determined based on the differences between the tax basis of
assets and liabilities and those amounts reported in the financial statements.
The future tax assets or liabilities are calculated using the substantively
enacted tax rates expected to apply in the periods in which the differences are
expected to be settled. Future tax assets are recognized to the extent that
they are considered more likely than not to be realized. Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. Measurement
Uncertainty.Any operations we may
have are subject to the effects of changes in legal, tax and regulatory
regimes, political, labor and economic developments, social and political
unrest, currency and exchange controls,  import/export restrictions and
government bureaucracy in the countries in which we may operate. In 2009, subsequent
to the expropriation and the resulting loss of control and physical access to
the Brisas project, we recorded a $150.7 million non-cash write-off of the
carrying value of the expropriated assets including an adjustment for the
estimated net realizable value of certain processing and related equipment
purchased for the Brisas Project of approximately $14.5 million. The realizable
value of the remaining processing and related equipment may be different than
management’s current estimate. See Notes 3, 9 and 13. The Company operates and
files tax returns in a number of jurisdictions. The preparation of such tax
filings requires considerable judgment and the use of assumptions. Accordingly,
the amounts reported could vary in the future. Net Loss Per Share. Net loss per share is computed by dividing net loss
by the combined weighted average number of Class A and B common shares
outstanding during each year, which is reduced by the common shares owned by Great Basin and MGC Ventures. In periods in which a loss is incurred, the effect of
potential issuances of shares under options and convertible notes would be
anti-dilutive, and therefore basic and diluted losses per share are the same.


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Selected Notes to Consolidated Financial Statements For the Nine Months Ended September 30, 2010

and 2009(unaudited) Expressed in U.S. Dollars
 Asset
Retirement Obligations.The fair value of a liability for an asset retirement
obligation is recognized in the period in which it is incurred if a reasonable
estimate of fair value can be made.  The associated asset retirement costs are
capitalized as part of the carrying amount of the long-lived asset and
amortized over the same period as the underlying asset. Convertible Notes.Convertible
notes are initially recorded at fair value and subsequently measured at
amortized cost. The fair value is allocated between the equity and debt
component parts based on their respective fair values at the time of issuance
and recorded net of transaction costs. The equity portion of the notes is
estimated using the residual value method. The fair value of the debt component
is accreted to the face value of the notes using the effective interest rate
method over the expected life of the notes, with the resulting charge recorded
as interest expense. Interest expense allocable to the qualifying cost of
developing mining properties and to constructing new facilities is capitalized
until assets are ready for their intended use. Comprehensive Income.Comprehensive income includes net income or loss and other comprehensive
income. Other comprehensive income may include unrealized gains and losses on
available-for-sale securities, gains and losses on certain derivative
instruments and foreign currency gains and losses from self sustaining foreign
operations. The Company presents comprehensive income and its components in the
consolidated statements of comprehensive loss. Financial
Instruments.The Company’s
financial instruments consist of cash and cash equivalents, marketable
securities, accounts payable, accrued expenses and convertible notes. Cash and
cash equivalents are classified as held for trading and any changes in fair
value are charged to the statement of operations. Marketable equity securities
are classified as available for sale with any unrealized gain or loss recorded
in other comprehensive income. Marketable debt securities are classified as
held-to-maturity and are measured at amortized cost using the effective
interest rate method. Other financial liabilities are accounted for at cost or
amortized cost. Disposal of Long-Lived Assets.Long-Lived assets are classified as held for sale in
the period in which certain criteria are met. Assets held for sale are measured
at the lower of carrying amount or fair value less cost to sell and are not
depreciated as long as they remain classified as held for sale. 2.             New
Accounting Policies US GAAP. The Company currently prepares its financial
statements in accordance with Canadian GAAP and includes a footnote reconciliation
to US GAAP. Effective January 1, 2011, the Company will adopt US GAAP and will
prepare its financial statements in accordance with US GAAP for all subsequent
US and Canadian filings. 3.             Expropriation of Brisas Project by
Venezuelan Government and Related Arbitration From
1992 to 2009 we focused substantially all of our management and financial
resources on the development of the Brisas gold and copper project located in
the Kilometre 88 mining district of the State of Bolivar in south-eastern Venezuela. After approval of the Brisas operating plan and the Environmental and Social
Impact Study in 2003 and 2007, respectively, the Ministry of Environment issued
in March 2007, the Authorization to Affect for the Brisas Project.  In April
2008, the Ministry of Environment revoked the Authorization to Affect without
prior notification. After
months of continuous efforts to meet with representatives of the Venezuelan
government to resolve the issues related to the revocation of the Authorization
to Affect, on April 21, 2009 the Company notified the Venezuelan government of
the existence of a dispute under the Agreement between the Government of Canada
and the Government of the Republic of Venezuela for the Promotion and
Protection of Investments (“Canada – Venezuela Treaty”). After
additional months of efforts to meet with representatives of the Venezuelan
government to resolve the issues related to the revocation of the Authorization
to Affect, on October 21, 2009 we filed a Request for Arbitration under the
Additional Facility Rules of the International Centre for Settlement of
Investment Disputes (ICSID), against the Bolivarian Republic of Venezuela (“Respondent”).  On October 26, 2009, Venezuelan
government personnel arrived at the Brisas Project camp site, claimed ownership
of the Brisas Alluvial Concession, seized assets, expelled our personnel and
took physical possession of the property. Subsequently, on November 4, 2009,
the Venezuelan government notified the Company through the issuance of an Administrative
Act, dated October 20, 2009, of its intent to cancel the Company’s underlying
hard rock concession which was formally cancelled in June 2010. In November 2009 our Request for Arbitration was
registered by ICSID (Gold Reserve Inc. v. Bolivarian Republic of Venezuela (ICSID Case No. ARB(AF)/09/1)).


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Selected Notes to Consolidated Financial Statements For the Nine Months Ended September 30, 2010 and 2009(unaudited) Expressed in U.S. Dollars
 As a result of the expropriation of the Brisas Project by the Venezuelan government we no longer have control or physical access to the project which has caused the Company to discontinue the development of its Venezuelan properties, including Brisas and Choco 5 (which was a grass-roots exploration property also located in the State of Bolivar) and discontinue reporting mineral reserves for Brisas. In 2009 we recorded a $150.7 million non-cash write-off of the carrying value of the expropriated assets including an adjustment for the estimated net realizable value of certain processing and related equipment purchased for the Brisas Project of approximately $14.5 million. The realizable value of the remaining processing and related equipment may be different than managements current estimate. The Company is seeking compensation in the arbitration for all of the loss and damage resulting from Venezuelas wrongful conduct which includes the full market value of the legal rights to develop the Brisas Project.  The Tribunal held the first session with the parties on April 23, 2010 during which time several procedural matters were agreed to, including the time schedule for the Arbitration. In compliance with that schedule, we filed our initial written submission, known as the Memorial, on September 24, 2010. The Respondent is required to file its reply to the Companys Memorial by March 7, 2011. Thereafter, further written submissions are scheduled to be made prior to the oral hearings, which are scheduled to commence on December 5, 2011. As a precondition to bringing an arbitration claim under the Canada-Venezuela Treaty the Company waived its right to commence or continue before Venezuelan courts or tribunals with other legal or administrative challenges to the conduct that forms the basis of this ICSID claim, including the revocation of the Authorization to Affect and the denial of the extension of the Brisas Alluvial and El Pauji Concessions. Both concessions were part of the Brisas Project. 4.             Cash and Cash Equivalents September 30,         December 31, 2010                     2009
 Bank deposits                                                                                                                             $ 48,124,779            $ 53,900,646 Money market funds7,315,891                 7,062,167 Total                                                                                                                                           $ 55,440,670            $ 60,962,813 
 The above amounts exclude restricted cash of approximately $9 million and $9.5 million as at September 30, 2010 and December 31, 2009, respectively. See Note 13, Commitments. At September 30, 2010 and December 31, 2009, the Company had approximately $151,000 and $59,000 respectively, in Venezuela and banks outside Canada and the U.S. 5.             Marketable Debt Securities September 30,                     December 31, 2010                                  2009
  Amortized cost                                                                                                               $ 10,032,392                           $ 10,175,020 
 The Companys marketable debt securities are classified as held-to-maturity and are measured at amortized cost using the effective interest rate method. 6.             Marketable Equity Securities September 30,               December 31, 2010                            2009
  Fair value at beginning of year                                                                                                   $    598,825                   $ 1,342,760 Acquisitions                                                                                                                                     681,135                      2,135,293 Dispositions, at cost                                                                                                                      (345,936)                   (2,102,548) Realized gain on sale                                                                                                                      (148,593)                   (2,274,848) Unrealized gain1,234,952                      1,498,168 Fair value at balance sheet date                                                                                                 $ 2,020,383                   $    598,825 
  The Companys marketable equity securities are classified as available-for-sale and are recorded at quoted market value with gains and losses recorded within other comprehensive income until realized. As of September 30, 2010 and December 31, 2009 marketable securities had a cost basis of $1,211,249 and $876,049, respectively.


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Selected Notes to Consolidated Financial Statements For the Nine Months Ended September 30, 2010 and 2009(unaudited) Expressed in U.S. Dollars
 7.             Financial Instruments  The fair values as at September 30, 2010 and December 31, 2009 along with the carrying amounts shown on the consolidated balance sheets for each classification of financial instrument are as follows: September 30, 2010December 31, 2009 Carrying                    Fair                        Carrying                      Fair Classification                  Amount                   Value                       Amount                   Value Cash and cash equivalents                  held for trading        $ 55,440,670       $ 55,440,670                $ 60,962,813       $ 60,962,813
 Restricted cash                                    held for trading             8,995,701            8,995,701                    9,489,777            9,489,777 Marketable debt securities                  held to maturity         10,032,392          10,041,850                  10,175,020          10,208,950 Marketable equity securities              available for sale           2,020,383            2,020,383                       598,825               598,825 Deposits advances and other              held to maturity              699,789               699,789                       566,483               566,483 A/P and accruals                    other financial liabilities             2,681,385            2,681,385                    3,790,003            3,790,003 Accrued interest                     other financial liabilities            1,641,849            1,641,849                       234,550               234,550 Convertible notes                   other financial liabilities          96,128,728          66,033,681                  93,693,168          52,540,530 
  Fair value estimates for marketable securities are made at the balance sheet date by reference to recent market transactions. The convertible notes are not listed on an exchange and the market for them is not active. Fair value estimates for convertible notes are made at the balance sheet date by reference to weighted average transaction prices over the preceding twelve months. CICA 3862 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: Level 1 inputs are quoted prices in active markets for identical assets or liabilities, Level 2 inputs are inputs other than quoted prices included within Level 1 that are directly or indirectly observable for the asset or liability and Level 3 inputs are unobservable inputs for the asset or liability that reflect the entitys own assumptions.  Fair value September 30, 2010               Level 1                Level 2                Level 3 Cash and cash equivalents                                               $ 55,440,670           $ 55,440,670 Marketable equity securities                                                2,020,383                2,020,383                                                
 Restricted cash                                                                     8,995,701                8,995,701
  Fair value December 31, 2009           Level 1                Level 2                Level 3 Cash and cash equivalents                                              $ 60,962,813           $ 60,962,813 Marketable equity securities                                                  598,825                   598,825                                                
 Restricted cash                                                                    9,489,777                9,489,777
   The Company is exposed to various risks including credit risk, liquidity risk, currency risk and interest rate risk as described below: a)Credit risk is the risk that a counter party will fail to meet its obligations to the Company. The Companys primary exposure to credit risk is through its cash and cash equivalents, restricted cash and marketable debt securities balances. The Company diversifies its cash holdings into major Canadian and U.S. financial institutions and corporations. b)Liquidity risk is the risk that an entity will encounter difficulty in meeting its obligations associated with its financial liabilities. The Company manages this risk by maintaining adequate cash balances through equity and debt offerings to meet its current and foreseeable obligations. The following table presents the Companys payments due on accounts payable and accrued expenses and its undiscounted interest and principal payments due on its convertible notes, based on the estimate that the term of the notes will end on June 15, 2012. If the notes were to reach their contractual maturity date of June 15, 2022, additional interest payments would amount to $56.3 million over the additional ten year term of the notes.


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Selected Notes to Consolidated Financial Statements For the Nine Months Ended September 30, 2010 and 2009(unaudited) Expressed in U.S. Dollars
 Payments due by Period
 Less thanMore Than Total                       1 Year                     1-3 Years               4-5 Years            5 Years
 A/P and accruals         $     2,681,385             $ 2,681,385                                                                                     Interest11,258,390                5,629,195           $   5,629,195                                                       Principal                        102,349,000                                          102,349,000                                                       Total                           $ 116,288,775             $ 8,310,580         $ 107,978,195                                                      
 c)The Company is subject to currency risk mainly due to its operations in Venezuela. Transactions denominated in foreign currency are exposed to exchange rate fluctuations which have an impact on the statement of operations.  The Companys cash, value added tax and other monetary assets and liabilities that are held in Venezuelan and Canadian currency are subject to fluctuations against the US dollar. A 10% weakening of those currencies against the US dollar would have increased (decreased) the Companys net gain or loss from the translation of foreign currency denominated financial instruments, for the nine months ended September 30, 2010 and 2009, by the amounts shown below. 2010                       2009
 Venezuelan Bolívar$ (13,383)                 $ 64,552 Canadian dollar                                                                       (2,481)                      3,485 Total                                                                                   $ (15,864)                 $ 68,037
 The Company limits the amount of currency held in non-U.S dollar accounts, but does not actively use derivative instruments to limit its exposure to fluctuations in foreign currency rates. d)The Company is subject to the risk that changes in market interest rates will cause fluctuations in the fair values of its financial instruments. Cash and cash equivalents earn floating market rates of interest. Other current financial assets and liabilities are generally not exposed to this risk because of their immediate or short-term maturity. The interest rate on the Companys convertible notes is fixed and therefore the interest payments are not subject to changes in market rates of interest. 8.             Capital Management The capital structure of the Company consists of common shares and equity units, convertible notes, stock options, accumulated deficit, accumulated other comprehensive income and KSOP debt. The Companys objectives when managing its capital are to: a)maintain sufficient liquidity in order to meet financial obligations including the costs of acquiring and developing mining projects and servicing debt; b)safeguard the Companys assets and its ability to continue as a going concern and c)maintain a capital structure that provides the flexibility to access additional sources of capital with minimal dilution to existing shareholders. The Company manages its capital consistent with the objectives stated above and makes adjustments to its capital structure based on economic conditions and the risk characteristics of the underlying assets. The Company is in compliance with the covenants of its convertible notes. There were no changes to the Companys capital management during 2010.


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Selected Notes to Consolidated Financial Statements For the Nine Months Ended September 30, 2010 and 2009(unaudited) Expressed in U.S. Dollars
 9.             Property, Plant and Equipment Accumulated Cost                          Depreciation                         Net
 September 30, 2010
 United States Machinery and equipment deposits                                             $        29,563,378                $                                $        29,563,378 Furniture and office equipment                                                                   506,339                          (426,277)                            80,062 Leasehold improvements                                                                              41,190                            (38,411)                              2,779 $        30,110,907                $        (464,688)           $        29,646,219
  Venezuela
 Buildings                                                                                      $             403,286                $        (277,757)           $             125,529 Furniture and office equipment                                                                   482,562                          (457,728)                            24,834 Transportation equipment                                                                          240,534                          (223,882)                            16,652 Machinery and equipment                                                                          497,808                          (288,425)                          209,383 1,624,190                       (1,247,792)                          376,398
 Total                                                                                            $        31,735,097                $     (1,712,480)           $        30,022,617
   Accumulated Cost                    Depreciation                                   Net
 December 31, 2009
 United States Machinery and equipment deposits                                             $        37,491,372                $                                $        37,491,372 Furniture and office equipment                                                                   506,007                          (399,737)                          106,270 Leasehold improvements                                                                              41,190                            (37,022)                              4,168 $        38,038,569                $        (436,759)           $        37,601,810
  Venezuela
 Buildings                                                                                      $             403,286                $        (254,200)           $             149,086 Furniture and office equipment                                                                  482,562                          (439,028)                            43,534 Transportation equipment                                                                          480,198                          (361,907)                          118,291 Machinery and equipment                                                                          497,808                          (288,427)                          209,381 1,863,854                       (1,343,562)                          520,292
 Total                                                                                            $        39,902,423                $     (1,780,321)           $        38,122,102
  Machinery and equipment deposits include amounts paid for infrastructure and milling equipment either in the manufacturing stage or completed and being stored. In 2009 we recorded a $150.7 million non-cash write-off of the carrying value of the expropriated assets including an adjustment for the estimated net realizable value of certain processing and related equipment purchased for the Brisas Project of approximately $14.5 million. The realizable value of the remaining processing and related equipment may be different than managements current estimate.


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Selected Notes to Consolidated Financial Statements For the Nine Months Ended September 30, 2010 and 2009(unaudited) Expressed in U.S. Dollars
 10.          KSOP Plan The KSOP Plan, adopted in 1990 for the benefit of employees, is comprised of two parts, (1) a salary reduction component, or 401(k), and (2) an employee share ownership component, or ESOP. Unallocated shares are recorded as a reduction to shareholders equity. Allocation of common shares or cash contributions to participants accounts is at the discretion of the Companys board of directors, subject to certain limitations. The value of the shares allocated is recorded in the statement of operations with a reduction of the KSOP debt account. The Company allocated shares or made cash contributions to eligible participants for the Plan years 2010, 2009 and 2008 valued at $0, $57,292 and $269,679, respectively. As of September 30, 2010, 22,246 common shares remain unallocated to plan participants. 11.          Stock Based Compensation The Company has two equity incentive plans; the 1997 Equity Incentive Plan (last amended in March 2006 and last re-approved by the shareholders in June 2009, the 1997 Plan) and the 2008 Venezuelan Equity Incentive Plan (approved by the shareholders in June 2008, the Venezuelan Plan).  Both plans permit the grants of stock options, stock appreciation rights and restricted stock, or any combination thereof, and each shall be 10% of the Companys outstanding shares, from time to time.  The grants will be for terms up to ten years with vesting periods ranging from immediate to up to 3 years Subsequent to shareholder approval in June 2008, 1,056,947 options previously granted to Venezuelan employees and consultants under the 1997 Plan were transferred to the Venezuelan Plan.  The 1997 Plan remains available for insiders, employees and consultants of the Company. Combined share option transactions for the nine months ended September 30, 2010 and 2009 are as follows: 2010                                                    2009
 Weighted                                             Weighted Average                                               Average Exercise                                               Exercise Shares               Price                        Shares                Price
 Options outstanding at beginning of period                            4,573,318            $ 2.67                       5,007,931           $ 3.18 Options exercised                                                                    (141,666)               0.29                                                        Options expired                                                                       (439,582)              4.59                         (584,589)             4.01 Options forfeited                                                                     (101,917)              2.83                           (79,667)             4.42 Options granted                                                                                                                                  547,500              0.73 Options outstanding at end of period                                      3,890,153              2.54                       4,891,175              2.79
 Options exercisable at end of period                                       3,462,364            $ 2.81                       3,442,265           $ 3.73
  Options available for
 grant at end of period under 1997 plan                                                                  2,655,139                                              1,794,322 Options available for
 grant at end of period under Venezuelan plan                                                        5,168,288                                              4,948,661
  Price                                                    Price Range                                                  Range
 Exercise price at end of period                                                   $0.29 - $ 5.36                                     $ 0.29 - $ 5.36 Exercise price for exercisable shares                                           $0.29 - $ 5.36                                     $ 0.29 - $ 5.36


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Selected Notes to Consolidated Financial Statements For the Nine Months Ended September 30, 2010 and 2009(unaudited) Expressed in U.S. Dollars
 The following table relates to stock options at September 30, 2010: Weighted Average Weighted                     Weighted                                               Exercise Price Price                                   Number              Average Remaining            Average                   Number                  of Exercisable Range                              Outstanding              Contractual Life          Exercise Price            Exercisable                   Options
 $0.29 - $0.29                    1,130,577                         3.18                          $0.29                        702,788                    $0.29 $0.73 - $1.89                       921,250                         2.06                          $1.22                        921,250                    $1.22 $3.95 - $4.19                       686,000                         1.01                          $4.12                        686,000                    $4.12 $4.22 - $4.62                       298,500                         1.17                          $4.57                        298,500                    $4.57 $4.83 - $4.83                       574,826                         0.38                          $4.83                        574,826                    $4.83 $5.07 - $5.36                       279,000                         1.16                          $5.19                        279,000                    $5.19 $0.29 - $5.36                    3,890,153                         1.82                          $2.54                     3,462,364                    $2.81
 The Company recorded compensation expense during the nine months ended September 30, 2010 and 2009 of $91,862 and $475,398, respectively, for stock options granted.  During the nine months ended September 30, 2010 and 2009, 0 and 547,500 new options were granted, respectively.  The fair value of options granted in 2009 was calculated at $323,449 using the Black-Scholes model based on the following assumptions: 
 Weighted average risk free interest rate                                                                          1.46% Expected life                                                                                                              4.6 years Expected volatility                                                                                                          120% Dividend yield                                                                                                                     nil
 In addition to the equity incentive plans, the Company also maintains the Gold Reserve Director and Employee Retention Plan.  Units granted under the plan become fully vested and payable upon achievement of certain milestones related to the Brisas project or in the event of a change of control.  The Companys Board of Directors is currently evaluating modifying the vesting provisions of the units to more adequately reflect the current business objectives of the Company including successful arbitration, settlement of our dispute with Venezuela, reacquiring the rights to the Brisas Project and successful acquisition of a new business opportunity meeting specific parameters. Each Unit granted to a participant entitles such person to receive a cash payment equal to the fair market value of one Gold Reserve Class A Common Share (1) on the date the Unit was granted or (2) on the date any such participant becomes entitled to payment, whichever is greater.  As of September 30, 2010 an aggregate of 1,732,500 unvested Units have been granted to directors and executive officers of the Company and 315,000 Units have been granted to other employees.  The value of these units, based on the grant date value of the Class A shares, was approximately $8.9 million 12.          Related Party Transactions: MGC Ventures. The Chief Executive Officer, President, Vice President-Finance and Vice President-Administration of the Company are also officers and/or directors and shareholders of MGC Ventures. The Company owned 12,062,953 common shares of MGC Ventures at September 30, 2010 and December 31, 2009, which represented 44% of its outstanding shares. The Company believes it has control over MGC Ventures due to the combined shareholdings of the Company and its officers and directors. MGC Ventures owned 258,083 common shares of the Company at September 30, 2010 and December 31, 2009.  In addition, MGC Ventures owned 0 and 280,000 common shares of Great Basin at September 30, 2010 and December 31, 2009, respectively. During the last three years, the Company sublet a portion of its office space to MGC Ventures for $6,000 per year. Great Basin. The Chief Executive Officer, President, Vice President-Finance and Vice President-Administration of the Company are also officers and/or directors and shareholders of Great Basin. The Company owned 15,661,595 common shares of Great Basin at September 30, 2010 and December 31, 2009, which represented 45% of its outstanding shares. The Company believes it has control over Great Basin due to the combined shareholdings of the Company and its officers and directors. Great Basin owned 491,192 common shares of the Company at September 30, 2010 and December 31, 2009. Great Basin also owned 0 and 170,800 common shares of MGC Ventures at September 30, 2010 and December 31, 2009, respectively. During the last three years, the Company sublet a portion of its office space to Great Basin for $6,000 per year.


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Selected Notes to Consolidated Financial Statements For the Nine Months Ended September 30, 2010

and 2009(unaudited) Expressed in U.S. Dollars
 13. 
        Commitments In
mid 2007, we commenced procurement efforts for the Brisas Project and placed
orders totaling approximately $125 million for a gyratory crusher, pebble
crushers, SAG and ball mills, mill motors, and other equipment for the Brisas
Project. Since the revocation of the Authorization to Affect, the Company has
sold certain equipment originally costing approximately $61.4 million. The
Company recovered approximately $35.1 million of progress payments and the
purchaser assumed the Company's remaining payment obligations of approximately
$21.9 million resulting in a combined loss on sale of equipment of approximately
$4.4 million. As of September 30, 2010, the Company had remaining equipment
commitments of approximately $9 million due within one year.  The Company
opened an irrevocable standby letter of credit with a Canadian chartered bank
providing security on the performance of a portion of these obligations.  As of
September 30, 2010 and December 31, 2009, the Company had restricted cash of $9
million and $9.5 million, respectively, as required by this letter of credit. 14.          Shareholder
Rights Plan The Company instituted a shareholder rights plan (the
“Rights Plan”) in 1999. Since the original approval by the shareholders, the
Rights Plan and the Rights Plan agreement have been amended and continued from
time to time. In June 2009, the shareholders approved certain amendments to the
Rights Plan including continuing the Shareholder Rights Plan until June 30,
2012. In December 2008, the Company’s Board of Directors amended the Rights
Plan by extending the definition of “Permitted Bid” to include a bid by an entity
which has confidential information about the Company that has executed a
confidentiality and standstill agreement within three months prior to the
commencement of the bid. The Rights Plan is intended to give adequate time for
shareholders of the Company to properly assess the merits of a take-over bid
without pressure and to allow competing bids to emerge. The Rights Plan is
designed to give the Board of Director’s time to consider alternatives to allow
shareholders to receive full and fair value for their common shares. One right
is issued in respect of each outstanding share. The rights become exercisable
only when a person, including any party related to it or acting jointly with
it, acquires or announces its intention to acquire 20% or more of the Company’s
outstanding shares without complying with the “permitted bid” provisions of the
Rights Plan. Each right would, on exercise, entitle the holder, other than the
acquiring person and related persons, to purchase Class A common shares of the
Company at a 50% discount to the market price at the time. 15.          Common
Shares and Equity Units During
the nine months ended September 30, 2010, the Company issued 141,666 shares at
an average price of $0.29 per share upon exercise of stock options and 231,000
shares at an average price of $1.15 per share as compensation. As of September
30, 2010, there were a total of 58,067,663 Class A and 500,236 Class B shares
issued. During the nine months ended September 30, 2009, the Company issued 551,500
shares at an average price of $0.71 per share as compensation. 16.          Convertible
Notes In
May 2007, the Company issued $103,500,000 aggregate principal amount of its
5.50% Senior subordinated convertible notes. The notes are unsecured, bear
interest at a rate of 5.50% annually, pay interest semi-annually in arrears and
are due on June 15, 2022.  The notes are convertible into Class A common shares
of the Company at the initial conversion rate, subject to adjustment, of
132.626 shares per $1,000 principal amount (equivalent to a conversion price of
$7.54). Upon conversion, the Company will have the option, unless there has
occurred and is then continuing an event of default under the Company’s
indenture, to deliver common shares, cash or a combination of common shares and
cash for the notes surrendered. The note holders have the
option to require the Company to repurchase the notes on June 15, 2012, at a
price equal to 100% of the principal amount of the notes plus accrued but
unpaid interest. The Company may elect to satisfy its obligation to pay the
repurchase price, in whole or in part, by delivering Common Shares. In the
event of a change of control of the Company, the Company may be required to
offer to repurchase the notes at a purchase price equal to 100% of the principal
amount of the notes plus accrued but unpaid interest unless there has occurred
and is continuing certain events of default under the Company’s indenture. At any time on or after June
16, 2010, and until June 15, 2012, the Company may redeem the notes, in whole
or in part, for cash at a redemption price equal to 100% of the principal
amount being redeemed plus accrued and unpaid interest if the closing sale
price of the Common Shares is equal to or greater than 150% of the conversion
price then in effect and the closing price for the Company’s Common Shares has
remained above that price for at least twenty trading days in the period of
thirty trading days preceding the Company’s notice of redemption. Beginning on
June 16, 2012, the Company may, at its option, redeem all or part of the notes
for cash at a redemption price equal to 100% of the principal amount being
redeemed plus accrued and unpaid interest.


---



Selected Notes to Consolidated Financial Statements For the Nine Months Ended September 30, 2010

and 2009(unaudited) Expressed in U.S. Dollars
 The
covenants contained in the 5.50% subordinated note indenture are limited to
administrative issues such as payments of interest, maintenance of office or
agency location, delivery of reports and other related issues. Likewise, events
of default are defined as failure to pay interest and principal amounts when
due, default in the performance of covenants, failure to convert notes upon
holder’s exercise of conversion rights and similar provisions or the Company’s
failure to give notice of a fundamental change which is generally defined as
events related to a change of control in the Company. Canadian
accounting standards require the Company to allocate the notes between their
equity and debt component parts based on their respective fair values at the
time of issuance. The liability component was computed by discounting the
stream of future payments of interest and principal at the prevailing market
rate for a similar liability that does not have an associated equity component.
The equity portion of the notes was estimated using the residual value method
at approximately $29 million, net of issuance costs. The fair value of the debt
component is accreted to the face value of the notes using the effective
interest rate method over the expected life of the notes, with the resulting
charge recorded as interest expense. The expected life of the notes is an estimate
and is subject to change, if warranted by facts and circumstances related to
the potential early redemption of the notes by either the Company or the
holders.  Interest and accretion expense allocable to the qualifying cost of
developing mining properties and to constructing new facilities is capitalized
until assets are ready for their intended use. The Company capitalized interest
and accretion on the notes until October, 2009, when the Company filed for
arbitration and when the Venezuelan government expropriated Brisas. Thereafter
all interest and accretion on the notes has been expensed. As of September 30,
2010, convertible notes with a face value of $1,151,000 had been settled in cash
or repurchased by the Company at a total cost of approximately $451,000. 17.          Takeover
Defense and Related Litigation On
December 15, 2008, Rusoro Mining Ltd. (“Rusoro”) commenced an unsolicited offer
to acquire all of the outstanding shares and equity units of the Company in
consideration for three shares of Rusoro for each Company share or equity unit.
On December 16, 2008, the Company filed an action in the Ontario Superior Court
of Justice against Rusoro and Rusoro’s financial advisor Endeavour Financial
International Corporation (“Endeavour”) seeking an injunction restraining
Rusoro and Endeavour from proceeding with Rusoro’s unsolicited offer,
significant monetary damages, and various other items. Endeavour was the
Company’s financial advisor from 2004 until shortly after the commencement of
Rusoro’s offer. On
February 10, 2009, the Ontario Superior Court of Justice granted an
interlocutory injunction restraining Rusoro from proceeding with any hostile
takeover bid to acquire the shares of the Company until the conclusion and
disposition at trial of the action commenced by the Company. The injunction was
granted by the Court following a motion by the Company on the basis that Rusoro
had access to or benefited from the use of the Company’s confidential
information as a result of Rusoro’s relationship with Endeavour. The Court also
issued an interlocutory injunction restraining Endeavour from having any
involvement with a hostile takeover bid for the Company. The Court further
required that Rusoro, Endeavour and their agents return to the Company both all
the confidential information of the Company and also anything produced from
that confidential information and pay the court costs. Following the issuance
of the interlocutory injunctions, Rusoro withdrew its unsolicited offer to
acquire the outstanding shares and equity units of the Company. On
February 15, 2009, Rusoro and Endeavour both served a motion with the Ontario
Superior Court of Justice seeking permission to appeal to the Divisional Court the February 10, 2009 order that was granted against them. The Company
opposed these motions which were heard in Toronto on April 2, 2009. On April 6,
2009 the permission to appeal was denied.  Rusoro has filed a counterclaim
against the Company for, among other things, damages of Cdn $102.5 million
allegedly arising from the Company’s successful motion for an interlocutory
injunction. Endeavour has filed a $0.5 million counter claim against the
Company relating to the lost opportunity to earn a success fee from the
successful completion of the Rusoro offer. The Company recently added two
additional defendants and amended the claim for monetary damages.


---



Selected Notes to Consolidated Financial Statements For the Nine Months Ended September 30, 2010 and 2009(unaudited) Expressed in U.S. Dollars
 18.          Differences Between Canadian and U.S. GAAP The Company prepares its consolidated financial statements in accordance with generally accepted accounting principles (GAAP) in Canada, which differ in certain respects from GAAP in the United States. The effect of the principal measurement differences between U.S. and Canadian GAAP are summarized below. Consolidated Summarized Balance Sheets Canadian GAAP                        Change                            U.S. GAAP
 September 30, 2010
 Assets Current assets                                                                            $     68,193,234                    $                                      $    68,193,234 Property, plant and equipment, net                                                  30,022,617                                                                 30,022,617 Other assets                                                                                         8,995,701                                                                   8,995,701
 $  107,211,552                    $                                      $  107,211,552
 Liabilities Convertible notesC                                                                    $    96,128,728                    $    4,354,006                    $  100,482,734 Other liabilities                                                                                  4,323,234                                                                    4,323,234
 100,451,962                          4,354,006                        104,805,968 Noncontrolling interestF                                                                    2,275,026                         (2,275,026)                                          Shareholders equity
 Common shares & equity unitsB                                                   248,239,008                         (5,698,031)                       242,540,977 Equity component of convertible notesC                                         28,652,785                       (28,652,785)                                         Less, common shares & equity units held by affiliates                                                                                (636,267)                                                                     (636,267) Contributed surplus E                                                                                                                5,171,603                             5,171,603 Stock optionsB                                                                                10,077,910                          4,434,753                           14,512,663 Accumulated deficitA,B,D                                                             (282,272,209)                       20,115,348                       (262,156,861) Accumulated other comprehensive incomeA                                        534,028                             275,106                               809,134 KSOP debt                                                                                         (110,691)                                                                     (110,691)
 Total Gold Reserve Inc. equity                                                       4,484,564                         (4,354,006)                              130,558
 Noncontrolling interestF                                                                                                            2,275,026                            2,275,026 Total Equity                                                                                    4,484,564                         (2,078,980)                           2,405,584
 $  107,211,552                    $                                       $  107,211,552
  Canadian GAAP                        Change                            U.S. GAAP
 December 31, 2009
 Assets Current assets                                                                              $    72,303,141                    $                                      $    72,303,141 Property, plant and equipment, net                                                  38,122,102                                                                  38,122,102 Other assets                                                                                         9,489,777                                                                    9,489,777
 $  119,915,020                    $                                      $  119,915,020
 Liabilities Convertible notesC                                                                    $    93,693,168                    $    6,048,554                    $    99,741,722 Other liabilities                                                                                  4,024,553                                                                    4,024,553
 97,717,721                          6,048,554                        103,766,275 Noncontrolling interestF                                                                    2,279,699                         (2,279,699)                                          Shareholders equity
 Common shares & equity unitsB                                                   247,905,231                         (5,698,031)                       242,207,200 Equity component of convertible notesC                                        28,652,785                       (28,652,785)                                         


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Selected Notes to Consolidated Financial Statements For the Nine Months Ended September 30, 2010 and 2009(unaudited) Expressed in U.S. Dollars
 Less, common shares & equity units held by affiliates                                                                                (636,267)                                                                      (636,267) Contributed surplus E                                                                                                                 5,171,603                            5,171,603 Stock optionsB                                                                                10,014,136                           4,434,753                          14,448,889 Accumulated deficitB,D                                                                (265,630,369)                       18,695,906                       (246,934,463) Accumulated other comprehensive income                                         (277,225)                                                                     (277,225) KSOP debt                                                                                           (110,691)                                                                     (110,691)
 Total Gold Reserve Inc. equity                                                     19,917,600                         (6,048,554)                         13,869,046
 Noncontrolling interestF                                                                                                            2,279,699                            2,279,699 Total Equity                                                                                  19,917,600                         (3,768,855)                         16,148,745
 $  119,915,020                    $                                      $  119,915,020
   Consolidated Summarized Statements of Operations  20102009  Net Loss under Canadian GAAP                                                                                          $ (16,641,840)                    $ (10,062,636) Interest expense D1,694,548 Gain on settlement of debt  C                                (47,429) Income tax  A                                                                                                                            (275,106)                               169,815
 Net loss under U.S. GAAP(15,222,398)                          (9,940,250)
  Basic and diluted net loss per share under U.S. GAAP                                                                                                                  $ (0.26)                               $ (0.17)
   Consolidated Summarized Statements of Comprehensive Loss 20102009  Net loss under U.S. GAAP                                                                                                     (15,222,398)                         (9,940,250) Other comprehensive income (loss) Unrealized gain on available- for-sale securities: A Holding gain arising during period                                                                                         1,234,952                            1,429,430 Reclassification adjustment for gain
    included in net loss                                                                                                               (148,593)                         (2,139,345)
 Total comprehensive loss under U.S. GAAP$ (14,136,039)                     $ (10,650,165)
   Consolidated Summarized Statements of Cash Flows 20102009  Cash flow used in operating activities under Canadian GAAP                                                                                                     $   (14,271,295)                  $   (12,833,939)  Cash flow used in operating activities
 under U.S. GAAP$   (14,271,295)                   $   (12,833,939)
  Cash flow provided by (used in) investing activities under Canadian GAAP                                                                                     $      8,708,068                    $   (13,371,932)  Cash flow provided by (used in) investing
 activities under U.S. GAAP$     8,708,068                    $  (13,371,932)


---



Selected Notes to Consolidated Financial Statements For the Nine Months Ended September 30, 2010 and 2009(unaudited) Expressed in U.S. Dollars
  AEffective September 30, 2008, the Company adopted EIC 172, which requires that the tax benefit of tax loss carryforwards recognized to offset unrealized gains in other comprehensive income, such as unrealized gains on available-for-sale securities, be recognized in net income (loss).  EIC 172 was applied retrospectively with restatement of prior periods from January 1, 2007. Under US GAAP, the tax benefit is recorded in other comprehensive income. BFor U.S. GAAP purposes, the Company adopted SFAS 123R (codified within ASC 718), Accounting for Stock Based Compensation effective January 1, 2006. SFAS 123R requires the use of the fair value method of accounting for stock based compensation. This standard is substantially consistent with the revised provisions of CICA 3870, which was adopted by the Company for Canadian GAAP effective January 1, 2004.  For U.S.GAAP, the Company applied the modified prospective method of adoption included in SFAS 123R which requires that the company expense the fair value of all unvested and new grants on a prospective basis beginning January 1, 2006. In 2005, for U.S. GAAP purposes, the Company accounted for stock-based employee compensation arrangements using the intrinsic value method prescribed in Accounting Principles Board (APB) Opinion No.25, Accounting for Stock Issued to Employees. Under Opinion No. 25, when the exercise price of certain stock options is amended, these options are accounted for as variable compensation from the date of the effective repricing. Under this method, following the repricing date, compensation expense is recognized when the quoted market value of the Companys common shares exceeds the amended exercise price. Should the quoted market value subsequently decrease, a recovery of a portion, or all of the previously recognized compensation expense will be recognized. The Company has not amended the exercise price of any stock options since 2001. C      In 2007, the company issued $103,500,000 aggregate principal amount of convertible notes. As described in Note 16, under Canadian GAAP these notes are allocated between their equity and debt component parts. The debt component is accreted to the face value of the notes with the resulting interest expense charged to operations.  Under U.S. GAAP, the notes are classified as a liability net of issuance costs and accreted to face value over the term ending on the first put date of the notes. As of September 30, 2010 and December 31, 2009, an additional $24.3 million and $22.6 million, respectively of accretion expense had been incurred for Canadian GAAP purposes over the amount incurred under U.S. GAAP. D     Prior to the Brisas expropriation and related arbitration filing, the Company capitalized interest on its convertible notes on an interest avoidance basis. The amount capitalized during an accounting period is determined by applying an interest rate to the average amount of accumulated qualifying assets during the period. The Companys qualifying assets include its costs of developing mining properties and constructing new facilities. The amount capitalized under U.S. GAAP differed from the amount capitalized under Canadian GAAP due to the difference in the amount of qualifying mineral property costs which had been accumulated under the two sets of accounting principles. Subsequent to the expropriation of the Brisas Project, all capitalized interest was written off. E      In 2003 and 2004, the Company completed equity offerings consisting of common shares and common share purchase warrants. For Canadian GAAP purposes the proceeds from the offerings were recorded as common shares. For U.S. GAAP purposes a value was assigned to the warrants and recorded as a separate element of stockholders equity. Warrants that expired unexercised were subsequently recorded as contributed surplus. F      Under Canadian GAAP, the noncontrolling interest is shown on the balance sheet between liabilities and equity. Under US GAAP, the nononcontrolling interest is reclassified to equity and shown as a separate component from the equity of the parent.  Additional Balance Sheet disclosure - U.S. GAAP  2010                                        2009
 Accounts payable                                                                                                             $      1,786,793                        $      2,064,306 Accrued expenses                                                                                                                        894,592                                1,242,847
 Accounts payable and accrued expenses                                                                         $      2,681,385                        $      3,307,153


---



ITEM 2.  Management’s
Discussion and Analysis of Financial Condition and Results of Operations Overview This
Management’s Discussion and Analysis of Financial Condition and Results of
Operations, dated November 9, 2010 is intended to assist in understanding and
assessing our results of operations and financial condition. The expense
categories shown in the consolidated statements of operations were revised as
of the end of 2009 to better present the current operations of the Company. As
a result the expense categories for the three and nine month periods ended September
30, 2009 have been revised to be comparative with the presentation of the three
and nine month periods ended September 30, 2010. The revisions had no effect on
previously reported results of operations. Gold
Reserve, an exploration stage company, is engaged in the business of acquiring,
exploring and developing mining projects. From 1992 to 2009 we focused
substantially all of our management and financial resources on the development
of the Brisas gold and copper project located in the Kilometre 88 mining
district of the State of Bolivar in south-eastern Venezuela (which we refer to
as the “Brisas Project” or “Brisas”). The Brisas Project is one of the largest
undeveloped gold/copper deposits in the world, containing estimated ore
reserves of 10.2 million ounces of gold and 1.4 billion pounds of copper. In
March 2007, the Venezuelan Ministry of Environment (“MinAmb”) issued the
Authorization for the Affectation of Natural Resources for the Construction of
Infrastructure and Services Phase of the Brisas Project (the “Authorization to
Affect”). The
Authorization to Affect was issued to the Company based on the extensive work
the Company had completed on the development of the Brisas Project including
the 2003 and updated 2005 Brisas operating plan approved by the Venezuelan
Ministry of Mines (“MIBAM”), and the July 2005 Brisas Environmental and Social
Impact Study for the Exploitation and Processing of Gold and Copper Ore
(“Estudio de Impacto Ambiental y Sociocultural” or “ESIA”), as
supplemented in January 2007, approved by the MinAmb. With
the Authorization to Affect, the Company in May 2007 raised (net of expenses)
$177.5 million for the Brisas Project comprised of $103.5 million of 5.50%
senior subordinated convertible notes (“convertible notes”) and $74 million of
common shares.  Thereafter we commenced significant pre-construction efforts
including awarding contracts for site preparation and construction camp
facilities and placing equipment orders totaling approximately $125.3 million. In
April 2008, the MinAmb revoked the March 2007 Authorization to Affect without
prior notification. After
the Company’s Board of Directors unanimously rejected an August 2008
unsolicited offer by Rusoro Mining Ltd. (“Rusoro”) to complete a business
combination by issuing two shares of Rusoro for each share of Gold Reserve, Rusoro
with the assistance of Endeavour Financial International Corporation
(“Endeavour”) in mid December 2008 launched a hostile takeover of the Company.
Rusoro was primarily focused on its mining activities in Venezuela and Endeavour had been the Company’s financial advisor from 2004 until shortly after the
commencement of the hostile offer. The Company filed an action in the Ontario
Superior Court of Justice (“Ontario Court”) seeking an injunction restraining
Rusoro and Endeavour from proceeding with the unsolicited offer, significant
monetary damages, and various other items. The Ontario Court granted an
interlocutory injunction in February 2009 restraining Rusoro from proceeding
with any hostile takeover until the conclusion and disposition at trial of the
action commenced by the Company. As a result Rusoro withdrew its takeover offer
and both Rusoro and Endeavour requested permission to appeal the injunction which
was subsequently denied in April 2009. Rusoro filed a counterclaim against the
Company for, among other things, damages of Cdn $102.5 million allegedly arising
from the Company’s successful motion for an interlocutory injunction and
Endeavour filed a $0.5 million counter claim against the Company relating to
the lost opportunity to earn a success fee from the successful completion of
the Rusoro offer. (See Part II- Other Information- Item 1. Legal Proceedings-
Litigation). In
April 2009 the Company notified the Venezuelan government of the existence of a
dispute under the Agreement between the Government of Canada and the Government
of the Republic of Venezuela for the Promotion and Protection of Investments (“Canada – Venezuela Treaty”). In May 2009 the Venezuelan government denied the extension of
the Brisas Alluvial Concession and the El Pauji Concession which had been
properly requested by the Company pursuant to Article 25 of the Venezuelan
mining law, in October 2007 and January 2008, respectively. MIBAM did not
respond to our request for the extensions during the requisite 6 month time
period as outlined in Article 25. Accordingly, the extensions were
automatically granted pursuant to the mining law. After being unsuccessful in
our efforts to meet with government officials to resolve the investment
dispute, on October 21, 2009 the Company filed a Request for Arbitration under
the Additional Facility Rules of the International Centre for Settlement of
Investment Disputes (ICSID), against the Bolivarian Republic of Venezuela. Venezuelan
government personnel subsequently arrived at the Brisas Project camp site on
October 26, 2009, claimed ownership of the Brisas Alluvial Concession, seized
assets, expelled our personnel and took physical possession of the property.
Subsequently, on November 4, 2009, the Venezuelan government notified the
Company through the issuance of an Administrative Act, dated October 20, 2009,
of its intent to cancel the Company’s underlying Brisas hard rock concession
and the government formally notified the Company of its cancelation in June, 2010.


---



In November 2009 our Request for Arbitration was
registered by ICSID (Gold Reserve Inc. v. Bolivarian Republic of Venezuela (ICSID Case No. ARB(AF)/09/1)). The Company
is seeking compensation in the arbitration for all of the loss and damage
resulting from Venezuela’s wrongful conduct which includes the full
market value of the legal rights to develop the Brisas Project.  The
Tribunal held its first session with the parties on April 23, 2010 during which
time several procedural matters were agreed to, including the time schedule for
the Arbitration. In compliance with that schedule, we filed our initial written
submission, known as the Memorial, on September 24, 2010 claiming US$1.928
billion compensation for all of the loss and damage resulting from Venezuela’s wrongful conduct, which includes the full market value of the legal
rights to develop the Brisas Project.  The Respondent is required to file
its reply to the Company’s Memorial by March 7, 2011. Thereafter, further
written submissions are scheduled to be made prior to the oral hearings, which
are scheduled to commence on December 5, 2011. As
a precondition to bringing an arbitration claim under the Canada-Venezuela
Treaty the Company waived its right to commence or continue before
Venezuelan courts or tribunals with other legal or administrative challenges to
the conduct that forms the basis of this ICSID claim, including the
revocation of the Authorization to Affect and the denial of the extension
of the Brisas Alluvial and El Pauji Concessions. In
2009 we recorded a $150.7 million non-cash write-off of the carrying value of
the expropriated assets including an adjustment for the estimated net
realizable value of certain processing and related equipment purchased for the
Brisas Project of approximately $14.5 million. The realizable value of the
remaining processing and related equipment may be different than management’s
current estimate. The
information contained in this Quarterly Report on Form 10-Q relating to Brisas
and Choco 5 is presented for informational and historical purposes and should
not be construed as an indication of our expectations regarding the future
development and operation of these properties or the outcome of the arbitration
proceedings. As a result of the expropriation of the Brisas Project by the
Venezuelan government, in 2009 we recorded a $150.7 million non-cash write-off
of the carrying value of the expropriated assets.  Also, we no longer report
mineral reserves for Brisas, and we have discontinued our activities relating
to the Brisas and Choco 5 properties. Since
acquiring the Brisas Alluvial Concession in 1992, we have spent close to $300
million on the project including equipment, financial, legal and engineering
costs incurred in support of our Venezuelan operations and the write-down of
previously capitalized costs associated with our Venezuelan operations. We
have no commercial production at this time and, as a result, we have not
recorded revenue or cash flows from mining operations and continue to
experience losses from operations, a trend we expect to continue unless and
until the investment dispute regarding Brisas is resolved favorably to the
Company and/or we acquire directly or indirectly other mining projects.
Historically we have financed the Company’s operations through the issuance of
common stock, other equity securities and convertible debt. The Company has
only one operating segment, the exploration and development of mineral
properties. We prepare our consolidated financial statements in U.S. dollars in
accordance with accounting principles generally accepted in Canada (see Note 18 to the Consolidated Financial Statements- Differences between Canadian
and U.S. GAAP). The
Company’s historical results of operations and current financial position are a
result of the Company’s efforts, since 1992, to develop the Brisas Project into
an operating mine and more specifically, our decision, subsequent to the
issuance of the Authorization to Affect (the authorization to begin
construction of the Brisas Project), to issue convertible notes and common
shares, place orders to acquire equipment, and to continue the development of
Brisas. Likewise our October 2009 Request for Arbitration under the Additional
Facility Rules of ICSID will shape the future financial position and results of
operations of the Company. We expect the arbitration process to last approximately
three years, consume substantial management time and cost an estimated $8
million to $10 million, excluding the time and funds necessary to collect on
any award. Our
primary objective is to manage the arbitration effort in cooperation with arbitration
counsel and various experts, to minimize costs and accelerate its completion,
to the extent possible. Substantially all of the key management personnel have
been employed by the Company for over 15 years with a single focus of
developing the Brisas Project. These individuals possess valuable historical
knowledge related to the Brisas Project which is important to the successful
execution of our arbitration efforts. In
addition to the management of our arbitration claim, we continue to explore
efforts to facilitate a resolution of our dispute with the Venezuelan
government, liquidate Brisas Project assets and evaluate other mining
opportunities for a direct or indirect participation. Throughout
the second and third quarters of 2010, management of the Company met several
times with working committees of MIBAM to discuss our investment dispute and
the government’s objective regarding the Brisas Project.  In October 2010,
the Venezuelan Attorney General’s office and MIBAM requested a meeting with the
Company to explore possible resolutions.  Management believes that this
meeting was positive primarily from the standpoint of attendance by the
Attorney General’s office and key members of MIBAM. While a general framework
for proceeding with settlement talks was considered and the overall tone was
constructive, there can be no assurance that a resolution to this investment
dispute can be concluded as an alternative to completing the arbitration
process. The
timing of our involvement in any new mining opportunity if any, and the amounts
that may be required cannot be determined at this time and are subject to
available cash, sale of equipment originally slated for the Brisas Project
and/or future financings, if any.


---



Upon the sale of Brisas Project assets or successful
settlement of our dispute with the Venezuelan Government, it is the intent of Management
to explore efforts to redeem all or a portion of the outstanding convertible
notes. These efforts could include a public offer to reacquire all or a portion
of the notes or a more limited “Dutch auction” or individual private
transactions. The time and extent of any plan will be influenced by, among
other things, terms of the indenture, regulatory issues, market conditions and
available cash. Investors
are urged to read our filings with U.S. and Canadian securities regulatory
agencies, which can be viewed on-line at www.sec.gov, www.sedar.com or at the
Company’s website,www.goldreserveinc.comwhich also includes the Company’s corporate governance policies. Additionally,
you can request a copy of any of these documents directly from us. Financial
Overview Cautionary
Statement Regarding Forward-Looking Statements The
information presented or incorporated by reference in this Quarterly Report on
Form 10-Q contains both historical information and forward-looking statements
(within the meaning of Section 27A of the Securities Act, Section 21E of the
Exchange Act and the Securities Act (Ontario)) that may state our intentions,
hopes, beliefs, expectations or predictions for the future. In this report,
forward-looking statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by us at this time, are
inherently subject to significant business, economic and competitive
uncertainties and contingencies. We caution that such forward-looking
statements involve known and unknown risks, uncertainties and other risks that
may cause our actual financial results, performance, or achievements of the
Company to be materially different from our estimated future results,
performance, or achievements expressed or implied by those forward-looking
statements. These
forward-looking statements involve risks and uncertainties, as well as assumptions
that may never materialize, prove incorrect or materialize other than as
currently contemplated which could cause our results to differ materially from
those expressed or implied by such forward-looking statements. The words
“believe,” “anticipate,” “expect,” “intend,” “estimate,” “plan,” “may,” “could”
and other similar expressions that are predictions of or indicate future events
and future trends which do not relate to historical matters, identify
forward-looking statements. Any such forward-looking statements are not
intended to give any assurances as to future results. Numerous factors could
cause actual results to differ materially from those in the forward-looking
statements. Due to risks and uncertainties, including the risks and uncertainties
identified in our Annual Report on Form 10-K- “Part I- Item 1A. Risk Factors”,
actual results may differ materially from current expectations. Numerous
factors could cause actual results to differ materially from those in the
forward-looking statements, including without limitation: ·the outcome of our arbitration
under the Additional Facility Rules of the International Centre for Settlement
of Investment Disputes of the World Bank, in Washington D.C. to determine
compensation claimed by us resulting from our claims against the Venezuelan
government and its agents and agencies; ·the realizable value of the
remaining processing and related equipment may be different than management’s
current estimate ·corruption and uncertain legal
enforcement; ·political and social instability; ·requests for improper payments; ·competition with companies that are
not subject to or do not follow Canadian and U.S. laws and regulations; ·regulatory, political and economic
risks associated with Venezuela including changes in laws and legal regimes; ·the result or outcome of the
litigation regarding the enjoined hostile takeover bid for us; ·impact of currency, metal prices
and metal production volatility; ·our dependence upon the abilities
and continued participation of certain key employees; ·the value of our 5.50% senior
subordinated convertible notes due on June 15, 2022 and potential volatility of
our Class A common shares (also referred to herein as “Common Shares”),
including potential dilution as a result of the conversion of the convertible
notes into our common shares by either us or the holder; ·the prospects for exploration and
development of other mining projects by us; ·and risks normally incident to the
exploration, development and operation of mining properties. Investors
are cautioned not to put undue reliance on forward-looking statements, and
investors should not infer that there has been no change in our affairs since
the date of this report that would warrant any modification of any
forward-looking statement made in this document, other documents filed
periodically with securities regulators or documents presented on our website.
All subsequent written and oral forward-looking statements attributable to us
or persons acting on our behalf are expressly qualified in their entirety by
this notice. We disclaim any intent or obligation to update publicly or
otherwise revise any forward-looking statements or the foregoing list of
assumptions or factors, whether as a result of new information, future events
or otherwise, subject to our disclosure obligations under applicable rules
promulgated by the U.S. Securities and Exchange Commission (the “SEC”). Liquidity and
Capital Resources At September 30, 2010 our total financial resources,
which included cash and cash equivalents, restricted cash and marketable
securities, were approximately $76.5 million compared to $81.2 million at
December 31, 2009. The Company’s cash and investments are held primarily in US
dollar denominated accounts.


---



September 30,  2010
     December 31, 2009
     ChangeCash and cash equivalents
     $  55,440,670
     $  60,962,813
     $ (5,522,143)Restricted cash
     8,995,701
     9,489,777
     (494,076)64,436,371
     70,452,590
     (6,016,219)Marketable securities
     12,052,775
     10,773,845
     1,278,930Total
     $  76,489,146
     $  81,226,435
     $ (4,737,289)
 Our financial resources decreased approximately $4.7 million from December 31, 2009. This decrease was primarily due to cash used in operating activities of approximately $14.3 million more fully described below and net purchases of marketable securities of $0.2 million, partially offset by proceeds from the sale of equipment of approximately $8.9 million.  Restricted cash decreased by approximately $0.5 million as a result of payments for purchases of equipment relating to our previous purchase commitments for the Brisas Project. As of November 9, 2010 we held approximately $75 million in cash, restricted cash and marketable securities. The primary future obligation of the Company is the 5.50% senior subordinated notes which may be settled in cash or common shares in the event the holder chooses a one-time option to put the notes back to the Company for repurchase on June 15, 2012 (see Note 16 to the consolidated financial statements). As a result, in the near-term we believe that cash and investment balances and funds available from potential future equipment sales will be sufficient to enable us to fund our activities through 2011. The timing and extent of additional funding, if any, depends on a number of important factors, including, but not limited to the timing and outcome of our investment dispute with the Venezuelan government, the timing and the amount of proceeds, if any, from the sale of Brisas Project assets, the extent of future acquisitions or investments, if any, status of the financial markets and our share price. Operating Activities Cash flow used by operating activities for the three and nine month periods ended September 30, 2010 was approximately $3.9 and $14.3 million, which was an increase over the same periods in 2009 of approximately $0.8 and $1.5 million, respectively. Investing Activities Cash provided by investing activities during the three months ended September 30, 2010 decreased by $4.8 million from the comparable period in 2009. This decrease was primarily due to a decrease in net proceeds from marketable securities and equipment transactions of $1.8 million and $2.9 million, respectively. Cash provided by investing activities during the nine months ended September 30, 2010 increased by $22.1 million from the comparative periods in 2009. This change is primarily due to a decrease in net cash used in marketable securities transactions of $8.3 million, an increase in net proceeds from equipment transactions of $10.9 million and a decrease in interest paid on convertible notes of $2.8 million (See Notes 5, 6 and 13 to the consolidated financial statements). 3 months
     
     
     9 months2010
     2009
     Change
     2010
     2009
     ChangeNet proceeds (purchases) of marketable securities
     $   35,778
     $ 1,868,614
     $ (1,832,836)
     $ (186,606)
     $ (8,477,135)
     $ 8,290,529Purchase of property, plant and equipment
     (2,552)
     (6,062,697)
     6,060,145
     (500,992)
     (11,818,595)
     11,317,603Proceeds from sale of equipment
     50,506
     7,297,598
     (7,247,092)
     8,901,590
     7,297,598
     1,603,992Decrease in restricted cash
     -
     1,742,162
     (1,742,162)
     494,076
     2,490,970
     (1,996,894)Interest paid on convertible debt
     -
     -
     -
     -
     (2,828,841)
     2,828,841Other
     -
     (7,460)
     7,460
     -
     (35,929)
     35,929$ 83,732
     $ 4,838,217
     $ (4,754,485)
     $ 8,708,068
     $ (13,371,932)
     $ 22,080,000
  Financing Activities The convertible notes (see Note 16 to the consolidated financial statements) are trading in the gray market often at a significant discount to face value. As the terms of the indenture provide that the Company may repurchase the convertible notes in open market purchases or negotiated transactions, in 2009 we re-purchased approximately $1.1 million (face value) of convertible notes for approximately $0.4 million. 3 months
     
     
     9 months2010
     2009
     Change
     2010
     2009
     ChangeNet proceeds from issuance of common shares
     -
     -
     -
     $ 41,084
     -
     $ 41,084Extinguishment of convertible notes
     -
     -
     -
     -
     $ (415,254)
     415,254-
     -
     -
     $ 41,084
     $ (415,254)
     $ 456,338


---



Contractual Obligations The following table sets forth information on the Companys material contractual obligation payments for the periods indicated as of September 30, 2010: Payments due by PeriodTotal
     Less than 1 Year
     1-3 Years
     More Than 5 YearsConvertible Notes(1)
     $113,258,390
     $5,629,195
     $107,629,195
     Equipment Contracts(2)
     9,024,135
     9,024,135
     
     Total
     $122,282,525
     $14,653,330
     $107,629,195
     
 1In May 2007, the Company issued $103,500,000 aggregate principal amount of its 5.50% convertible notes. The notes pay interest semi-annually and are due on June 15, 2022.  Subject to certain conditions, the notes may be converted into Class A common shares of the Company, redeemed or repurchased. The note holders have the option to require the Company to repurchase the notes on June 15, 2012, at a price equal to 100% of the principal amount of the notes plus accrued but unpaid interest. The Company may elect to satisfy its obligation to pay the repurchase price, in whole or in part, by delivering Common Shares. In the event of a change of control of the Company, the Company will be required to offer to repurchase the notes at a purchase price equal to 100% of the principal amount of the notes plus accrued but unpaid interest unless there has occurred and is continuing certain events of default under the Companys indenture. At any time on or after June 16, 2010, and until June 15, 2012, the Company may redeem the notes, in whole or in part, for cash at a redemption price equal to 100% of the principal amount being redeemed plus accrued and unpaid interest if the closing sale price of the Common Shares is equal to or greater than 150% of the conversion price then in effect and the closing price for the Companys Common Shares has remained above that price for at least 20 trading days in the period of 30 trading days preceding the Companys notice of redemption. Beginning on June 16, 2012, the Company may, at its option, redeem all or part of the notes for cash at a redemption price equal to 100% of the principal amount being redeemed plus accrued and unpaid interest. As of September 30, 2010, $1,151,000 face value of convertible notes have been settled in cash or repurchased by the Company at a total cost of $451,000. The amounts shown above include the interest and principal payments due based on the estimate that the term of the notes will end on June 15, 2012. If the notes were to reach their contractual maturity date of June 15, 2022, additional interest payments would amount to $56.3 million over the additional ten year term of the notes. 2The Company originally placed orders totaling $125.3 million for the fabrication of processing equipment, mobile equipment and other mining equipment and related engineering. As of September 30, 2010, the Company had equipment orders totaling $61.7 million and has made payments on these orders of $52.7 million. Results of Operations Summary Results of Operations Consolidated net loss for the three and nine months ended September 30, 2010 was approximately $6.9 million and $16.6 million, an increase of approximately $1.4 million and $6.6 million, respectively over the comparable periods in 2009. As more fully discussed below, the change in net loss for the three and nine months ended September 30, 2010 was due to a decrease in other income of approximately $0.3 and $2.1 million, respectively and an increase in expenses of approximately $1.0 million and $4.5 million, respectively. 3 months
     
     
     9 months2010
     2009
     Change
     2010
     2009
     ChangeOther Income
     $   85,242
     $ 406,813
     $ (321,571)
     $  834,660
     $ 2,959,063
     $ (2,124,403)Total expenses
     (7,016,079)
     (5,970,687)
     (1,045,392)
     (17,476,500)
     (13,021,699)
     (4,454,801)Net Loss
     $ (6,930,837)
     $ (5,563,874)
     $ (1,366,963)
     $(16,641,840)
     $ (10,062,636)
     $ (6,579,204)
  Other Income As noted above we have no commercial production at this time and as a result, other income is often variable from period to period due to one-time or otherwise atypical sources of income such as gains on disposition of marketable securities, extinguishment of debt and sale of equipment.


---



During the three months ended September 30, 2010, the decrease in other income was primarily attributed to a reduction in gain on disposition of marketable securities of approximately $0.2 million, and an increase in foreign currency loss of $0.1 million. During the nine months ended September 30, 2010, the decrease in other income is primarily attributed to a reduction in gain on extinguishment of debt of approximately $0.6 million, due to the absence of any re-purchases of the Companys convertible notes, reduction in gain on disposition of marketable securities of approximately $2.0 million, partially offset by a gain on sale of equipment of $0.4 million and an increase in foreign currency gain of $0.1 million.  3 months
     
     
     9 months2010
     2009
     Change
     2010
     2009
     ChangeInterest
     $  62,748
     $ 74,672
     $ (11,924)
     $ 191,285
     $ 221,924
     $ (30,639)Gain on extinguishment of debt
     -
     -
     -
     -
     601,936
     (601,936)Gain on disposition of marketable securities
     42,042
     285,362
     (243,320)
     148,593
     2,139,345
     (1,990,752)Gain on sale of equipment
     36,633
     -
     36,633
     406,677
     -
     406,677Foreign currency gain (loss)
     (56,181)
     46,779
     (102,960)
     88,105
     (4,142)
     92,247$ 85,242
     $ 406,813
     $ (321,571)
     $ 834,660
     $ 2,959,063
     $ (2,124,403)
  Expenses Overall the Companys expenditures during the three and nine months ended September 30, 2010 are a function of the Companys efforts to reduce core operating expenses which are obscured by ongoing costs associated with our arbitration claim against the government of Venezuela, equipment storage costs, takeover defense costs associated with the 2008 Rusoro hostile takeover bid and interest expense on the convertible debt which as a result of the expropriation of the Brisas Project is no longer capitalized as a cost of the project. During the three and nine month periods ended September 30, 2010, core operating costs decreased by approximately $1.1 million $3.3 million, respectively, primarily as a result of reductions related to both the number of personnel and compensation related items, fees associated with consultants, other discretionary costs and litigation costs. On a net basis, non-core operating costs, primarily costs associated with equipment storage, equipment sales, arbitration, takeover defense and interest on the convertible notes that is no longer capitalized, increased during the three and nine months ended September 30, 2010 by approximately $2.1 million and $7.7 million, respectively. Overall, as a result of reductions in more readily controllable core operating costs, expenses increased by approximately $1.1 million and $4.5 million during the three and nine months ended September 30, 2010.  3 months
     
     
     9 months2010
     2009
     Change
     2010
     2009
     ChangeCorporate general and administrative
     $  729,920
     $ 1,147,667
     $ (417,747)
     $ 2,511,437
     $ 3,668,635
     $ (1,157,198)Venezuelan expenses
     327,830
     686,147
     (358,317)
     1,204,481
     2,152,968
     (948,487)Corporate communications
     101,124
     195,166
     (94,042)
     363,415
     599,617
     (236,202)Legal and accounting
     81,148
     222,286
     (141,138)
     372,810
     1,292,225
     (919,415)1,240,022
     2,251,266
     (1,011,244)
     4,452,143
     7,713,445
     (3,261,302)Equipment holding costs
     305,979
     12,500
     293,479
     784,968
     75,458
     709,510Loss on sale of equipment
     -
     3,423,544
     (3,423,544)
     -
     3,423,544
     (3,423,544)Arbitration
     3,437,287
     260,771
     3,176,516
     5,861,225
     260,771
     5,600,454Takeover defense
     -
     23,804
     (23,804)
     -
     1,383,002
     (1,383,002)Interest expense
     2,246,755
     -
     2,246,755
     6,654,770
     -
     6,654,770Income tax (benefit) expense
     (213,964)
     (1,198)
     (212,766)
     (276,606)
     165,479
     (442,085)5,776,057
     3,719,421
     2,056,636
     13,024,357
     5,308,254
     7,716,103Total Expenses for the Period
     $ 7,016,079
     $ 5,970,687
     $ 1,045,392
     $ 17,476,500
     $ 13,021,699
     $ 4,454,801
  Off-Balance Sheet Arrangements The Company is not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on the Companys financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources. Adoption of US GAAP in 2011 The Company currently prepares its financial statements in accordance with Canadian GAAP and includes a foot note reconciliation to US GAAP. Effective January 1, 2011, the Company will adopt US GAAP and will prepare its financial statements in accordance with US GAAP for all subsequent US and Canadian filings.


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Transactions with Related Parties MGC Ventures.The
Chief Executive Officer, President, Vice President-Finance and Vice
President-Administration of the Company are also officers and/or directors and
shareholders of MGC Ventures. The Company owned 12,062,953 common shares of MGC
Ventures at September 30, 2010 and December 31, 2009 which represented 44% of
its outstanding shares. MGC Ventures owned 258,083 common shares of the Company
at September 30, 2010 and December 31, 2009.  In addition, MGC Ventures owned  0
and 280,000 common shares of Great Basin at September 30, 2010 and December 31,
2009, respectively. During the last three years, the Company sublet a portion
of its office space to MGC Ventures for $6,000 per year. Great Basin.The Chief Executive Officer, President,
Vice President-Finance and Vice President-Administration of the Company are
also officers and/or directors and shareholders of Great Basin. The Company
owned 15,661,595 common shares of Great Basin at September 30, 2010 and
December 31, 2009, which represented 45% of its outstanding shares. Great Basin owned 491,192 common shares of the Company at September 30, 2010 and December
31, 2009. Great Basin also owned 0 and 170,800 common shares of MGC Ventures at
September 30, 2010 and December 31, 2009, respectively. During the last three
years, the Company sublet a portion of its office space to Great Basin for
$6,000 per year. ITEM 3.QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK The
Company is exposed to various risks including credit risk, liquidity risk,
currency risk and interest rate risk as described below: Credit
risk is the risk that a counter party will fail to meet its obligations to the
Company. The Company’s primary exposure to credit risk is through its cash and
cash equivalents, restricted cash and marketable debt securities balances. The
Company diversifies its cash holdings into major Canadian and U.S. financial institutions and corporations. Liquidity
risk is the risk that an entity will encounter difficulty in meeting its obligations
associated with its financial liabilities. The Company manages this risk by
maintaining adequate cash balances through equity and debt offerings to meet
its current and foreseeable obligations. The
Company is subject to currency risk mainly due to its operations in Venezuela. Transactions denominated in foreign currency are exposed to exchange rate
fluctuations which have an impact on the statement of operations.  The
Company’s cash, value added tax and other monetary assets and liabilities that are
held in Venezuelan and Canadian currency are subject to fluctuations against
the US dollar. The Company limits the amount of currency held in non-U.S dollar
accounts, but does not actively use derivative instruments to limit its
exposure to fluctuations in foreign currency rates. The
Company is subject to the risk that changes in market interest rates will cause
fluctuations in the fair values of its financial instruments. Cash and cash
equivalents earn floating market rates of interest. Other current financial
assets and liabilities are generally not exposed to this risk because of their
immediate or short-term maturity. The interest rate on the Company’s
convertible notes is fixed and therefore the interest payments are not subject
to changes in market rates of interest.  ITEM 4.CONTROLS AND PROCEDURES During
the fiscal period covered by this report, the Company’s management, with the
participation of the Chief Executive Officer and Chief Financial Officer,
carried out an evaluation of the effectiveness of the design and operation of
the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)). Based on such evaluation, the Company’s Chief Executive Officer and
Chief Financial Officer have concluded that, as of the end of the period
covered by this report, the Company’s disclosure controls and procedures are
effective to ensure that information required to be disclosed by the Company in
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the required time periods and are designed to
ensure that information required to be disclosed in its reports is accumulated
and communicated to the Company’s management, including the Chief Executive
Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure. There has been no change in the Company’s
internal control over financial reporting during the most recent fiscal quarter
that has materially affected, or that is reasonably likely to materially
affect, the Company’s internal control over financial reporting.


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PART II – OTHER INFORMATION  ITEM 1.LEGAL PROCEEDINGS Arbitration On
October 21, 2009 we filed a Request for Arbitration under the Additional
Facility Rules of ICSID, against the Bolivarian Republic of Venezuela (“Respondent”). In November 2009 our Request for Arbitration was registered by
ICSID (Gold Reserve Inc. v. Bolivarian Republic of Venezuela (ICSID Case No.
ARB(AF)/09/1)). The Company is seeking US
$1.928 billion compensation in the arbitration for all of the loss and damage
resulting from Venezuela’s wrongful conduct which includes the full
market value of the legal rights to develop the Brisas Project.  The
Tribunal held its first session with the parties on April 23, 2010 during which
time several procedural matters were agreed to, including the time schedule for
the Arbitration. In compliance with that schedule, we filed our initial written
submission, known as the Memorial, on September 24, 2010. The Respondent is
required to file its reply to Company’s Memorial by March 7, 2011. Thereafter,
further written submissions are scheduled to be made prior to the oral
hearings, which are scheduled to commence on December 5, 2011. The
Canada-Venezuela Treaty requires as a precondition to bringing an arbitration
claim under the Treaty that an investor and any enterprise the
investor owns directly or indirectly that has suffered losses that form the
basis of a claim by the investor to "waive[ ]  its right to initiate
or continue any other proceedings in relation to the measure that is alleged to
be in breach of  [the Treaty]  before the courts or
tribunals of the Contracting Party concerned or in a dispute settlement
procedure of any kind."  As a result, the Company and its relevant
subsidiaries waived their right to commence or continue before
Venezuelan courts or tribunals with other legal or administrative challenges to
the conduct that forms the basis of the ICSID claim, including the
revocation of the Authorization to Affect and the denial of the extension
of the Brisas Alluvial and El Pauji Concessions. Litigation On
December 15, 2008, Rusoro Mining Ltd. (“Rusoro”) commenced an unsolicited offer
to acquire all of the outstanding shares and equity units of the Company in
consideration for three shares of Rusoro for each Company share or equity unit.
On December 16, 2008, the Company filed an action in the Ontario Superior Court
of Justice against Rusoro and Rusoro’s financial advisor Endeavour Financial
International Corporation (“Endeavour”), seeking an injunction restraining
Rusoro and Endeavour from proceeding with Rusoro’s unsolicited offer,
significant monetary damages, and various other items. Endeavour was the
Company’s financial advisor from 2004 until shortly after the commencement of
Rusoro’s offer. On
February 10, 2009, the Ontario Superior Court of Justice granted an
interlocutory injunction restraining Rusoro from proceeding with any hostile
takeover bid to acquire the shares of the Company until the conclusion and
disposition at trial of the action commenced by the Company. The injunction was
granted by the Court following a motion by the Company on the basis that Rusoro
had access to or benefited from the use of the Company’s confidential
information as a result of Rusoro’s relationship with Endeavour. The Court also
issued an interlocutory injunction restraining Endeavour from having any
involvement with a hostile takeover bid for the Company. The Court further
required that Rusoro, Endeavour and their agents return to the Company both all
the confidential information of the Company and also anything produced from
that confidential information and pay the court costs. Following the issuance
of the interlocutory injunctions, Rusoro withdrew its unsolicited offer to
acquire the outstanding shares and equity units of the Company. On
February 15, 2009, Rusoro and Endeavour both filed a motion with the Ontario
Superior Court of Justice seeking permission to appeal to the Divisional Court the February 10, 2009 order that was granted against them. The Company
opposed these motions which were heard in Toronto on April 2, 2009. On April 6,
2009 the permission to appeal was denied.  Rusoro has filed a counterclaim
against the Company for, among other things, damages of Cdn $102.5 million
allegedly arising from the Company’s successful motion for an interlocutory
injunction. Endeavour has filed a $0.5 million counter claim against the
Company relating to the lost opportunity to earn a success fee from the
successful completion of the Rusoro offer. Costs associated with the takeover
defense and litigation amounted to $2.0 million and $5.4 million in 2009 and
2008, respectively.  The Company recently
added two additional defendants and amended the claim for monetary
damages.


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ITEM 1A.RISK FACTORS The
risk factors for the quarter ended September 30, 2010 are substantially the
same as those disclosed and discussed in Item 1A of our Annual Report on
Form 10-K for the year ended December 31, 2009.  ITEM 2.UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS- None ITEM 3.       DEFAULTS UPON SENIOR SECURITIES- None ITEM 4.       [REMOVED AND RESERVED] ITEM 5.OTHER INFORMATION- None  ITEM 6.       EXHIBITS  31.1 Certification of Principal
Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002  31.2 Certification
of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002  32.1 Certificate
of Principal Executive Officer pursuant to 18 U.S.C. 1350 (Section 906 of the
Sarbanes-Oxley Act of 2002)  32.2 Certificate of Principal
Financial Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley
Act of 2002)


---



EXHIBIT
31.1CERTIFICATION
OF THE CEO PURSUANT TO SECTION 302  I, Rockne J Timm, certify that: 1. I have reviewed this report on Form 10-Q of Gold
Reserve Inc.; 2. Based on my knowledge, this report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this report; 3. Based on my knowledge, the financial statements, and
other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have: a) designed such disclosure controls
and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this
report is being prepared; b) designed such internal control over
financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles; c) evaluated the effectiveness of the
registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such
evaluation; and d) disclosed in this report any change
in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth
fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and 5. The registrant’s other certifying officer and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of
registrant’s board of directors (or persons performing the equivalent
functions): a) all significant deficiencies and
material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial
information; and b) any fraud, whether or not material,
that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.   /s/
 Rockne J. Timm Rockne J. Timm Chief Executive Officer November 9, 2010


---



EXHIBIT 31.2CERTIFICATION OF THE CFO PURSUANT TO
SECTION 302   I, Robert A. McGuinness, certify that: 1. I have reviewed this report on Form 10-Q of Gold
Reserve Inc.; 2. Based on my knowledge, this report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this report; 3. Based on my knowledge, the financial statements, and
other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have: a) designed such disclosure controls
and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this
report is being prepared; b) designed such internal control over
financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles; c) evaluated the effectiveness of the
registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such
evaluation; and d) disclosed in this report any change
in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth
fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and 5. The registrant’s other certifying officer and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of
registrant’s board of directors (or persons performing the equivalent
functions): a) all significant deficiencies and
material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and b) any fraud, whether or not material,
that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.   /s/
Robert A. McGuinness Robert
A. McGuinness Vice President Finance and Chief
Financial Officer November 9, 2010


---



EXHIBIT32.1 CERTIFICATION OF THE CEO PURSUANT TO SECTION 906 Certification of Principal Executive Officer Pursuant to 18 U.S.C. 1350 (Section 906 of the
Sarbanes-Oxley Act of 2002) I, Rockne J. Timm, Chief Executive Officer of Gold
Reserve Inc., certify, to the best of my knowledge, based upon a review of the
Quarterly Report on Form 10-Q for the period ended September 30, 2010 of Gold
Reserve Inc. that: (1) The Quarterly Report on Form 10-Q fully complies
with the requirements of Section 13(a) of the Securities Exchange Act of
1934, as amended; and (2) The information contained and incorporated by
reference in the Quarterly Report on Form 10-Q fairly presents, in all material
respects, the financial condition and results of operations of Gold Reserve
Inc.   /s/
 Rockne J. Timm Rockne J. Timm Chief Executive Officer November 9, 2010


---



EXHIBIT32.2 CERTIFICATION OF THE CFO PURSUANT TO SECTION 906 Certification of Principal Financial Officer Pursuant to 18 U.S.C. 1350 (Section 906 of the
Sarbanes-Oxley Act of 2002)  I, Robert A. McGuinness, Vice President Finance and
Chief Financial Officer of Gold Reserve Inc., certify, to the best of my
knowledge, based upon a review of the Quarterly Report on Form 10-Q for the
period ended September 30, 2010 of Gold Reserve Inc. that: (1) The Quarterly Report on Form 10-Q fully complies
with the requirements of Section 13(a) of the Securities Exchange Act of
1934, as amended; and (2) The information contained and incorporated by
reference in the Quarterly Report on Form 10-Q fairly presents, in all material
respects, the financial condition and results of operations of Gold Reserve
Inc.   /s/
Robert A. McGuinness Robert
A. McGuinness Vice President Finance and Chief
Financial Officer November 9, 2010


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