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

To: Casaubon who wrote (43619)	10/22/1999 11:40:00 PM
From: Hawkmoon	Read Replies (1) \| Respond to of 116759

Of course it would.... The market clearly understands that the US has stated they have no intention of selling gold. The effect would be FAR GREATER than that which occurred when the BOE announced they were selling a measly 425 tonnes over the course of a year+... That the problem... the POG is supported by the psychological reassurance that supply will be intentionally limited due to public pressure on the US Congress not to sell gold. Thus, the FED and other CBs subsidize the entire gold mining sector by limiting liquidity in the gold markets during periods of sporadic demand. The US has painted itself into a monetary corner by maintaining this inflexible policy on gold. Were the US to even make a basic statement that they reserved the right to sell quantities of their gold reserves in order to prevent undue market pressures on the US dollar we'd be that much closer to the current market price for gold. It would provide a tone of "fear" against undue gold speculation that might undermine the strength of the dollar artificially. That what we do with regard to every other currency... we maintain a reserve that we can use to maintain a relative equilibrium in currency exchange rates. But telling the market that they can basically have a free hand to speculate and drive up the price of gold with no fear of CB sales to provide a moderating pressure on the market for gold is a recipe for disaster, just as it does in every other market. AG is jaw-boning the equity markets and uses the interest rate "tool" to evoke discipline. But the Fed has no such tool to wield against gold undermining the dollar's status as the global reserve currency. And btw, I do believe I answered your question. If you don't accept the answer, I can't do anything more. There are only two global reserve currencies, the dollar and gold. And increase in one surely impacts the price of the other. Regards, Ron