It gets' curiouser and curiouser by the minute <g> ...................
Reserve Bank lends R600m stash of gold
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October 31 1999 at 08:37PM
Pretoria - The Reserve Bank said at the weekend it was lending gold from its reserves, a practice which traders said helped push the price of the metal down 20 percent in three years, slashing producers' profits.
The loans, about 300 000 ounces worth $90 million (R600m)at current prices, represent 7,5 percent of South Africa's total gold reserves and are made to boost income. South Africa produced about 15 million ounces of the precious metal last year.
"We've done it for a number of months," said Lambertus van Zyl, the general manager of international banking at the central bank. "It's an important decision for the bank but it's minuscule in relation to total (global) official gold reserves."
Gold dropped to a 20-year low of $251,95 an ounce in August on concern that sales and loans of gold by central banks were increasing supply. On September 26, 15 European central banks announced they would restrict sales and lending from their reserves to help boost the price of the metal.
Permission to begin lending South Africa's gold reserves had been given by the Reserve Bank governor and this was reflected in the Reserve Bank's accounts, Van Zyl said.
"South Africa has been a pretty active manger of its reserves," said Tony Warwick-Ching, an analyst at Virtual Metals Research in London. "They're experienced and skilled operators in the gold market."
Gold fell 1 percent on October 21 after Kuwait said it would begin lending all of its 79-ton gold reserve to take advantage of a curb in gold lending by European central banks.
Profits of South African gold producers, which include the world's two biggest, Anglogold and Gold Fields, have been hurt in recent years by the drop in gold prices.
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