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Politics : Dutch Central Bank Sale Announcement Imminent?
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To: Bill Murphy who wrote (17)5/31/1998 12:55:00 AM
From: teevee  Read Replies (1) of 80824
 
Hi,
Jimmy Rodgers is only partially correct. Central banks will never sell all of their gold holdings. Gold is held for market making purposes when the markets lose confidence in the "coin of the realm"/paper money and buy gold. This is precisely when central banks sell. There is G-7 policy to maintain confidence in members currencies. What has really dropped the price is that large commercial bank gold holdings have been put to work through gold loans and leases. These same commercial banks also actively trade covered options. Also, there are huge futures contracts at much higher prices which are being closed out with signicant loses. In addition, as gold is priced in US dollars, the price of gold has come down to match demand as gold remains at higher prices when bought with currencies that have weakened against the almighty US dollar. I think that only supply and demand will effect the price as gold has been commoditized. Good luck.
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