9/13/99 - Swiss keep an eye on gold price
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LONDON (Business Day, September 13, 1999) - Swiss central bank president Hans Meyer says the low gold price will influence a decision on when the bank will start sales of its 1300 tons of surplus gold.
He said at the weekend the bank would steer a course between demands for quick sales and the need to get a reasonable price. Meyer refused to be specific on the timetable.
In an interview with Swiss business paper Finanz und Wirtschaft, he said the bank would "presumably have the freedom to act in the spring" once the legislative process to authorise gold sales had taken its course. "Basically, there is no intention to use that (freedom). When and how that will happen - we will see," he said.
Meyer said the fall in the gold price had more to do with market psychology than with actual official sales. "Until now, only central banks with small gold reserves have sold," he said. "That indeed caused reaction for psychological reasons, but the major gold holders haven"t conducted sales."
The Bank of England has started selling off a portion of its holdings, and despite the drop in the price has said it will continue with planned sales.
Meyer said Switzerland"s gold reserves were double its actual needs. It had as much as Germany, whose economy was 10 times larger than the size of Switzerland"s.
"We came to the conclusion that it would be sensible to use half the gold reserves for other purposes," he said.
Switzerland"s central bank was thinking of eliminating its "obsolete" discount rate. "The money market is supplied through currency swaps and repo operations."
Meyer said the central bank expected inflation to average about 1% and he saw no unsettling signs of higher prices to come. - Dow Jones.
Copyright 1999 Business Day. Distributed via Africa News Online. |
