Thursday January 28, 9:46 am Eastern Time
Company Press Release
New York Meeting Examines Gold's Monetary Role
NEW YORK--(BUSINESS WIRE)--Jan. 28, 1999--Gold's monetary role and its position as a
reserve asset throughout the world were vigorously presented at a conference arranged by the
Reinventing Bretton Woods Committee in New York this week. The two day event which set out to
examine ways to strengthen international monetary cooperation attracted a number of distinguished speakers and delegates
including the Deputy Finance Minister of Germany; senior officials of the World Bank; and a large number of country
directors of the IMF.
Dick Ware, representing the World Gold Council's Public Policy Centre in London, argued that the advent of the Euro as the
second major global currency could well pose problems for the international monetary system. ''For the past 35 years, the
dollar has faced no significant challenge,'' he said. ''Now, however, the Euro, representing as it does an economy almost as
large as that of the U.S. and with extremely important capital markets, gives countries a real choice as to where they want to
hold their reserves and what arrangements they might make for aligning their currencies.''
Mr. Ware cautioned that the coexistence of two quasi equal currencies could well lead to more instability, as when fashions
changed, investors may forsake one and rush to the other.
''If this were to prove the case,'' he said, ''then this would be a very good reason why gold would benefit any portfolio. Its
qualities make it negatively correlated with virtually any other financial asset and this improves the risk/reward balance.''
Mr. Ware went on to say that gold represents the second largest component of official sector reserves by value making up
some 16 percent of total holdings. He said that the IMF holds substantial amounts of gold and it was, in fact, the third largest
individual holder. Its Executive Board in 1995 agreed that there were extremely good reasons for continuing to hold gold -
not the least being that they were able to respond to unforeseen contingencies - of which the arrival of the Euro may be one.
He reminded the audience that since an amendment to its articles in 1978, the IMF has forbidden its members to peg their
currencies, in any way, to gold. ''This is surely unnecessary,'' said Mr. Ware. ''Gold will stand or fall on its own merits
which are many. Why should the IMF any longer be so dogmatic that it cannot allow its members to choose freely their
currency arrangements?''
The World Gold Council is an international organization formed and funded by leading gold mining companies from around
the world to increase the demand for gold. The countries served by the Council account for approximately 80% of global
gold demand.
This statement was issued by Marston Webb International on behalf of the World Gold Council. If you have difficulty in
receiving it, please call Victor Webb at (212) 684-6601.
Contact:
World Gold Council
Dick Ware, 44-0171 930 5171
or
World Gold Council, New York
George Milling Stanley, 212/317-3848
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