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

To: Alex who wrote (44496)	11/3/1999 7:06:00 AM
From: long-gone	Read Replies (1) \| Respond to of 116762

Reserve Bank gold lending draws criticism Darren Schuettler Related Articles Gold Fields makes R48m hedge loss (31 October 1999) </English/Business/Results/ENG_169927_757032_SEO.asp> AngloGold defends hedge programme (31 October 1999) </English/Business/Companies/ENG_170919_760352_SEO.asp> Gold support crumbles as fears about producers ebb (01 November 1999) </English/Business/Markets/ENG_172669_767118_SEO.asp> Gold surge points to cyclical market turn (02 November 1999) </English/Business/Markets/ENG_173243_769129_SEO.asp> Johannesburg - Gold lending by South Africa's Reserve Bank is sending the wrong message from a country that has criticised similar practices by European central banks, analysts and industry officials said on Tuesday. The quantity of gold lent by the country's central bank, about 300 000 ounces, was too small to have a significant impact on the market, but still made some in the industry uncomfortable, they said. "Given the amount of energy dedicated to try to convince central banks globally and the IMF not to sell their gold, I think it's very bad and I think it's the wrong message," a Johannesburg-based mining analyst told Reuters. Bernard Swanepoel, Chief Executive of Harmony Gold, one of the country's unhedged gold producers, said he would prefer the central bank not to engage in gold lending. "Certainly I would have been quite proud of our Reserve Bank if they did not participate in this. I think the returns they get on the reserves are negligible compared to the damage done to the gold price," Swanepoel told Reuters. But Lambertus van Zyl, the Reserve Bank's general manager of international banking, said the loans represent only 7.5% of South Africa's total gold reserves. "I don't think in that sort of amount it can (send a negative message). 300 000 ounces is so tiny it's almost nothing," van Zyl said. South Africa is the world's biggest gold producing country with output of 464 tonnes in 1998. Production has steadily declined from a peak of more than 1 000 tonnes in the 1970s, but gold mining is still a major employer and the country's largest foreign exchange earner. When gold prices slumped to new lows in July amid concerns about central bank sales and lending, South Africa led an international campaign against the gold policies of European central banks and the International Monetary Fund (IMF). "Certainly in our view central bank lending has been one of the major contributors to creating an environment where speculators can have a one-way bid on gold going down," Swanepoel said. Gold plumbed two-decade lows under $260 an ounce before rebounding to over $300 in late September after 15 European central banks pledged to limit gold sales, lending and derivatives trade. London gold was trading around $289 on Tuesday. Roger Baxter, economist at the industry's Chamber of Mines, said the central bank deserved credit in that it was being transparent about its gold lending. "It's peanuts if you really think about it. I wouldn't criticise them too much about doing a little bit of leasing activity. At least they are open about it," Baxter said. "If we can get a clear fix from all central banks on how much is leased, it would allow the market to digest what level lease rates should be at," he added. Reuters news.24.com