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

To: lorne who wrote (46070)	12/17/1999 4:15:00 AM
From: Alex	Respond to of 116764

Unanswered question about Britain's gold by Anthony Hilton, City Editor Treasury Minister Melanie Johnson must be wondering why she entered politics. As well as being charged with the management of the Financial Services and Markets Bill, which I predict will come be seen as one of the most repressive and pernicious pieces of legislation ever passed by a non-right-wing government, she is also under siege from those who believe the Government is trying to conceal an almighty scandal in the gold markets. The gold bugs' basic thesis is as follows: Central banks, including the Bank of England, are supposed to look after national gold reserves but for the past decade they have tried to make a turn by lending the gold to other people who use it for speculation. Most of these people have sold it short in the bullion market with the result that the price has fallen steadily, despite the fact that demand for the metal for jewellery and industrial uses exceeds newly-mined supply - a shortfall that ought to mean prices edge upwards. Recently, however, the price has fluctuated wildly. This has caught out some participants and brought into semi-public view the extent of the speculation and deep involvement of certain financial houses. Clearly, some huge losses have been made and if the gold price were to rise it is possible they would become unbearable. This has also raised the question in some people's minds of whether all the gold that has been lent will ever be returned. It is not a frivolous question. Ten years ago Portugal lost almost all its gold having lent it to the New York broker Drexel, which went bust. Gold bugs have asked Johnson for a straight answer to a straight question: Is she sure the Bank of England will get our gold back? Unfortunately and unnervingly she has so far failed to give a straight answer. Slow justice It seems a pity in the season of goodwill to talk about regulation, but issues will arise that cannot be ignored. It is widely assumed by those who have never fallen foul of the regulator that people who have had that misfortune have somehow brought it on themselves. This is frequently the case, but not always so. One reader contacted me recently because he worked for a futures broking firm which closed its doors last February. He was not a director, merely a senior employee, and his firm folded because a client defaulted on a seriously large debt. This aroused the attention of the Securities and Futures Authority, which as part of its investigation into the collapse informed the directors and senior employees of the failed company that there was a possibility they might come under investigation. That was last February and those employees are still none the wiser as to whether they are liable to be investigated. They claim the SFA will not clarify the position for them, which means they are not only unemployed but unemployable. No potential employer will look at someone who might be under investigation. Apart from natural suspicions as to whether the person is fit and proper, employers do not want to incur all the costs of recruitment only to find the person taken on collects a ban six months later. On the other hand the individual can scarcely complete an application form and omit to mention the possibility of the investigation. Seeking to conceal this fact from a potential employer would be seen as compounding any offence. These are not famous people whose well-connected friends will give them unofficial consultancies to make ends meet. They are normal, ordinary people who happened to be in the wrong place at the wrong time. Now they find themselves looking for justice in the wrong place at the wrong time - in the offices of the City's regulators at the close of the 20th century. ¸ Associated Newspapers Ltd., 16 December 1999 Terms and Conditions This Is London thisislondon.co.uk