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To: Bill Murphy who wrote (35276)	6/14/1999 5:38:00 AM
From: Alex	Read Replies (2) \| Respond to of 116752

G-7 to Sell Gold to Aid Third-World Dictators 10 million ounces FRANKFURT - Finance ministers of the seven richest economies agreed over the weekend to aid 36 of the world's poorest nations with a plan to ease their crushing debt burdens. If approved this week at a summit meeting of the Group of Seven industrial nations in Cologne, the proposal would for the first time finance some of the debt relief by selling about one-tenth of the gold stockpiles of the International Monetary Fund. Although the amount of gold to be sold is relatively small, the sale seems certain to further depress world gold prices, which have slid to their lowest level in two decades on government plans to unload the precious metal on world markets. Gold for immediate delivery, which closed Friday in London trading at $260.65 an ounce, was quoted Wednesday at $259.25 an ounce - its lowest level since May 1979. The use of existing gold reserves to aid impoverished nations reflects a major policy shift by Germany's eight-month-old center-left government, which announced over the weekend that it was prepared to reverse Bonn's long-standing aversion to tapping the IMF's gold supply. ''There will be a very limited volume of gold sales, about 10 million ounces,'' said Finance Minister Hans Eichel, chairman of a meeting of G-7 finance ministers in Frankfurt on Saturday. Led by resistance from the Bundesbank, the German central bank, Bonn until recently was the most vocal opponent of using gold to forgive Third World debts, even as the other members of the group - which also includes Britain, Canada, France, Italy, Japan and the United States - gradually lined up behind the proposal. ''Germany will not object if the others want it,'' Mr. Eichel said. Germany signed on after international aid agencies campaigned against the ''debt trap,'' which they described as a crippling burden for the developing world. Currently, 41 of the world's poorest nations collectively owe $220 billion, a sum so staggering for them that social critics and aid agencies say debt-service obligations trap these nations, many of them in Africa, in poverty and preventable disease. Despite debt rescheduling in the past, some still spend more than half their national budgets on debt payments. The new outline, to be presented to G-7 heads of state when they gather Friday for a three-day meeting, will be more generous than the existing Heavily Indebted Poor Country initiative mounted in 1996, finance ministers said. According to the British chancellor of the exchequer, Gordon Brown, who has championed Third World debt cancellation, 36 destitute nations will be eligible for debt relief, up from 29 under that existing program. The Cologne program foresees as much as $70 billion in debt forgiveness, which by some measures is more than twice the volume of the current plan, Mr. Brown said. The new initiative reduces the current six-year qualification period that poor nations must bear before receiving debt relief, Mr. Brown said, although the ministers declined to give details of the new time frame. It also offers a more flexible definition of ''sustainable'' levels of debt payments by poor nations, allowing a greater number to qualify. Under the current program, only Uganda and Bolivia are theoretically eligible for a debt reduction. Despite the measures, the Cologne declaration is thought unlikely to silence critics of policies toward Third World debt. ''This agreement is probably still going to leave countries spending up to a fifth of their government revenue on debt servicing,'' said Kevin Watkins, a spokesman for Oxfam, an aid agency. Acknowledging the ''many competing considerations,'' the U.S. Treasury secretary, Robert Rubin said the G-7 had struck ''an appropriate balance'' between poverty reduction and economic reform. With its 103 million ounces of bullion valued at around $27 billion, the IMF presides over the world's second-largest stockpile, behind that of the U.S. government. The amount envisioned for sale is about one-tenth of that, about 300 tons, valued at $2.7 billion International Herald Tribune, June 14, 1999

To: Bill Murphy who wrote (35276)	6/14/1999 8:30:00 AM
From: ForYourEyesOnly	Respond to of 116752

S.Africa calls for regulated official gold sales LONDON, June 14 (Reuters) - South Africa's Reserve (central) Bank on Monday suggested future official sales of gold be conducted in a regulated manner through the Bank for International Settlements (BIS) to ensure market transparency and stability. James Cross, deputy governor of the Reserve Bank told delegates at the Financial Times World Gold conference that official sector sales should be done in a transparent way. He said 16 of the top 20 official sector holders of gold were voting members of the BIS -- accounting for around 90 percent of total world official sector holdings. ''We feel that the Bank for International Settlements could play a large role,'' Cross said. He suggested that official sector sales of gold be conducted through auctions by the BIS according to a set auction calendar. "Would it not be practical as in the case of government debt, which is marketed in an open and transparent fashion... that the voting members of the BIS commit to selling gold via an annual auction calendar which would be executed by the BIS. ''Would this not take away a lot of the uncertainty in the market. This is not a call to try and fix the price, the issue is that it will bring more transparency,'' Cross said. Cross said this could ensure that the market would know where the next official sector sales would be coming from, which could add to stability in the bullion market. ''We feel it will go a long way to taking out a lot of the secrecy, the rumour-mongering and it would help a lot to create a stable market,'' Cross said.

To: Bill Murphy who wrote (35276)	6/14/1999 11:32:00 AM
From: Ron Everest	Read Replies (1) \| Respond to of 116752

Bill I am interested to know if anyone has done an indepth analysis as to the characteristics of/and total gold sold forward? There is continuous inferences that there are significant naked shorts out there of substantial amounts. Like up to 10,000 tonnes. It would appear to me that the majority of the forward sales involve covered positions ie: - Central Banks loan gold to Gold Banks - Gold Banks sell the gold and owe lease rate to the Central Banks and the deals have a specific time when the gold must be returned - Producers commit with Gold Banks for their future production at times which match the times when the Gold Banks must return the gold borrowed from the Central Banks. - There appear to be wild card terms and conditions which allow the producer to cancel with penalties or defer. My assumption is that these conditions will flow back to the Central Banks. There are persistent rumors that the total sold forward or short are in the 3,000 to 10,000 tonne range. What portion of these are forward sales with agreements for future production from producers? Is this thinking accurate or? There are other rumors that the US can't withstand a gold audit as the gold may simply not be there. I am wondering if the US is also playing the strategy of forward selling and covering of risk by contracting future production. Frankly, there is so much bs about these things that it is difficult to form an accurate opinion. The notion that shorts will have to cover en masse is bogus IMO. Can you refute that thought? Does GATA have any numbers on this? Best regards, Goldnerd