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

To: Bill Murphy who wrote (36746)	7/7/1999 3:55:00 PM
From: Alex	Read Replies (1) \| Respond to of 116752

IMF to mull gold sales plan as opposition mounts By Mark Egan WASHINGTON, July 7 (Reuters) - The International Monetary Fund's board will meet on Friday to discuss how to sell part of its gold reserves without the bruising affect on prices seen after the Bank of England sold 25 tonnes of gold bullion on Tuesday. ''The board will be discussing these issues on Friday,'' IMF spokesman Graham Newman said. The IMF plans to sell up to 10 million ounces of a total gold reserve of 104 million ounces over several years to help relieve the debt of 41 of the world's poorest countries. The hotly debated plan, which needs approval from the U.S. Congress, met with increased opposition following Tuesday's sales by the Bank of England which drove gold down to a 20-year low of $256.80 a troy ounce. South African Finance Minister Trevor Manuel was among those claiming IMF gold sales would harm the struggling economies it aimed to help. ''It doesn't make sense to tell countries we will weaken your economies and then give you a little debt relief,'' he said after the Bank of England sales. IMF Managing Director Michel Camdessus continued to defend the plan. ''We will not sell this gold in a disorderly or rash way which would depress an already depressed market,'' Camdessus said on Monday before the Bank of England's sales. Gold experts and aid organizations said it was not gold sales that were pounding gold prices lower but the attitudes of gold-producing nations. Jeffrey Christian, an analyst at CPM Group in New York, said gold prices have dropped in recent months because gold-producing nations have created a sense of panic by objecting to the gold sales rather than downplaying their significance. ''Instead of saying this amount of gold sales can be easily absorbed by the market, the gold producers have contributed to the negative atmosphere in the market by objecting,'' Christian said, noting that Tuesday's Bank of England sales only amounted to 3 percent of London's daily bullion market turnover. Tuesday's sales by the Bank of England were the first step in a plan to cut its reserves to 300 tonnes from 715 tonnes. ''You can expect the bears to use the IMF gold sales issue to drive the price of gold down further,'' he said. Veena Siddharth of aid organization Oxfam International in Washington disagreed with the idea that gold prices were being driven lower by Bank of England sales or by the prospect of the IMF putting some of its gold on the market. ''There is an element of denial among the gold-producing countries,'' she said. ''The price of gold is going to go down, that's inevitable, whether the IMF sells gold or not.'' Opponents of the IMF gold sales plan contend sales would hurt the price of gold and offset much of the benefit given by debt relief since 36 of the 41 poor countries are gold producers. Gold has slumped from $291 an ounce at the beginning of the year, losing around $35, or more than 10 percent, since the Bank of England gold sale plan was announced in early May. Switzerland intends to sell 1,300 tonnes of excess gold reserves and transfer the funds to a foundation to help victims of poverty, human rights abuses and catastrophes. Siddharth said she expects the IMF gold sales to generate renewed opposition in Congress, particularly among politicians from the western U.S. gold-producing states, when lawmakers return to Washington next week. Among those opposing the plan are House Republican Leader Dick Armey, who has urged fellow lawmakers to oppose the plan. The plan needs the approval of 85 percent of the IMF's board. Since the United States has a 17-percent vote at the fund, Congress could effectively veto it. Armey and Joint Economic Committee Vice Chairman Jim Saxton of New Jersey introduced a bill last week which would block the sale of IMF gold unless proceeds were returned to the U.S. and other IMF donor nations. biz.yahoo.com