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To: The Vet who wrote (7858)	6/11/2002 2:58:36 PM
From: Frederick Langford	Respond to of 16631

11/06/2002 18:43 - (SA) Dutch cenbank move supports gold Steven Swindells London - A move by the Dutch central bank to reduce its gold lending is additional support for the world gold price which has shadowed its highest level in more than 2-1/2 years this month, metals analysts said on Tuesday. De Nederlandsche Bank, a regular gold seller under the 1999 agreement regulating European central bank disposals, said on Monday it had started to withdraw bullion reserves it had loaned out to provide liquidity for industry sellers in the market. The bank made the move because of low returns in lending the gold into the market. Jan Lamers, a manager of the Dutch central bank's gold investments and sales, said in a speech at the 2002 London Bullion Association conference in San Francisco that the bank responded to increased demand for gold borrowing from mining firms and other forward sellers in recent years by raising the amount on loan from 10 tonnes a year to 140 tonnes currently. The move to rein in its lending would further discourage forward selling - or hedging - by miners, removing a traditional cap on gold prices. "The announcement by the Dutch Central Bank concerning a marked reduction in its gold lending is positive," said Kevin Norrish, minerals economist at Barclays Capital. One-year lease rates in the London bullion market improved 5-10 basis points on the move though the gold price fell as funds took profits after gold's strong bull run this month. "The medium term impact, especially if it is indicative of a trend amongst other European banks, as we suspect, will be to add further downward pressure to the forward gold prices curve, supporting the trend to reduced producer hedging and ultimately improving the rate of return on central bank gold lending," Norrish said in a research note. Moves by leading producers not to sell forward have helped to lift gold prices. Leading gold miners cut their hedge books by more than 100 tonnes in the first quarter of this year, according to metals consultancy Gold Fields Mineral Services (GFMS). Hedging is when producers sell their as-yet unmined nuggets in forward markets at fixed prices in order to guarantee income. It made sense during the gold bear market of the last few years, but hedging has proved a dead loss since gold prices have hit their highest level in 2-1/2 years. By not hedging gold, producers are virtually becoming net buyers in the market by removing supply from the market and needing to secure physical supplies to buy back their hedge positions. REUTERS