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Gold/Mining/Energy : BANDORE
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To: Earl Pyatt who wrote (1178)2/3/1998 10:46:00 AM
From: geoff s.  Read Replies (1) of 1692
 
Food for Thought

Davos may provide gold comfort

By Fred Brenchley, Davos

Gold could be a quiet winner from the World Economic Forum in Davos, dominated by the economic gloom from Asia.

France's central-bank chief Jean-Claude Trichet set the positive tone when he told a closed session that France did not intend to sell any of its large gold reserves.

Fear of huge sales by European central banks in the lead-up to the launch of the euro single currency and creation of the European Central Bank (ECB) was one of the triggers of the recent gold price slump -- although it has climbed back somewhat to hover at about $US300 ($448) an ounce.

Mr David Hale, chief economist of the Zurich group, who attended the session, said he believed the non-sales stance of several central banks could feed through to market sentiment in the near future.

South Africa's executive Vice-President Thabo Mbeki has been actively lobbying central bankers in Davos not to sell down gold reserves. He also wants the ECB to decide on holding gold as part of its reserves when it is established later this year. Uncertainty on ECB gold holdings has added to concern about disposals by European central banks.

Mr Mbeki argues that central banks and gold producers have a "community of interest". It is in the interest of neither to allow uncertainty to depress gold prices, even if central banks wish to sell in future.

Uncertainty has certainly been one of the major negatives for gold recently.

The World Gold Council, the major producers lobby, has also been pressing the ECB to declare its intentions to ease uncertainty.
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