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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Ken Benes who wrote (36630)	7/6/1999 10:36:00 AM
From: Tomas	Respond to of 116753

GOLD: UK tests the waters for sell-offs - Financial Times, July 6 By Gillian O'Connor, Mining Correspondent, in London Tuesday's first gold auction in 20 years will be closely watched by central banks and the International Monetary Fund. The IMF is expected to vote later this year to sell a tenth of its gold reserves to help relieve the debt burden on the world's poorest countries. The 10 per cent fall in the bullion price since the UK sale was announced in May has also crystallised the gold industry's opposition to other proposed official sales, notably by the IMF. But the "Stop the IMF sale" campaign seems close to turning into a "Get our gold back from the IMF campaign," which could rebound against the gold lobbyists. The UK is just one of a series of central banks which have sold gold recently, and its proposed sale over several years of 415 tonnes, more than half its gold reserves, is fairly modest. But its decision to sell by auction and announce the sale beforehand, has given other prospective sellers, notably the IMF (300 tonnes) and Switzerland (1,300 tonnes) a test run at Britain's expense. "The Bank of England is a role model for many other central banks," Andy Smith, principal commodities analyst at Mitsui Bussan Commodities, said yesterday. If the UK auction goes smoothly, the Swiss and the IMF may use it as a template. It had been suggested that the three sales could be orchestrated, with some international body, such as the Bank for International Settlements, running an joint auction calendar. This now looks less likely, since the vehemence of the attacks on the UK government may have made politicians inside and outside the UK wary of exposing themselves to a further onslaught. After today's sale is out of the way, attention will switch to Washington, where the lobbying battle has been gaining momentum and US political opposition is mounting. The IMF holds about 3,000 tonnes of gold, having sold about 1,500 tonnes between 1976 and 1980. At last month's Cologne summit, the leaders of the G7 industrialised countries approved the sale of up to a tenth of the total, but any actual sale would have to be approved with an 85 per cent vote by the IMF executive board. The vote is likely to take place at the annual IMF meeting in late September. However, the US has 17 per cent of the votes on the executive committee, and so could block the sale. The US administration favours the sale, but Lawrence Summers, the new US treasury secretary, said last month that the US would not back it unless it was authorised by Congress. A concerted lobbying effort against the sale plan has been launched by the gold industry: producers, mining unions, and politicians from gold producing countries, particularly in Africa. Last week Jim Saxton, vice-chairman of the congressional joint economic committee, introduced legislation in Congress that would prohibit the sales of IMF gold unless the profits were returned to member states. Mr Saxton is also reported to have suggested that, if the IMF needs more money, it should start by giving all its gold back to the member countries. "There are, for gold, some perilous undercurrents to what is going on. It is pretty clear that for some of the US politicians the financial autonomy of the IMF rather than the fate of the gold industry is the gut issue," said Tony Warwick-Ching, an independent analyst at Virtual Gold Research.