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

To: IngotWeTrust who wrote (97452)	4/16/2004 11:36:42 AM
From: lorne	Read Replies (2) \| Respond to of 116920

France Mulls Selling Part of Gold Stock JOHN LEICESTER Associated Press Posted on Thu, Apr. 15, 2004 sunherald.com PARIS - The hoard is rich enough to make James Bond villain Goldfinger drool. More than 3,000 metric tons of gold, the world's fourth biggest holding and a symbol of French independence, doing nothing in vaults under Paris' streets. It's the doing nothing part that rankles France's frenetic new Finance Minister Nicolas Sarkozy. In a radical move, he is mulling selling a chunk of the Bank of France's treasure to help plug huge holes in French public finances. A gush of French gold onto world markets will not likely result in cheaper wedding rings or jewelry in the short term. But such a sale by a country that long coveted gold as a counterweight to the U.S. dollar would, analysts say, underscores the cooling of a love affair with the precious yellow metal. Sarkozy first floated the possible sale of gold and other assets last week, just eight days after President Jacques Chirac moved him from the Interior Ministry in a Cabinet reshuffle. Chirac apparently hopes that Sarkozy, who cut crime as interior minister, can do the same thing for France's 1 trillion euro ($1.19 trillion) debt and help restore faith in his conservative government that was hammered in March regional elections. Sarkozy says he'll leave no stone unturned in his drive to cut costs. He plans to sell a 30-40 percent stake in state-owned aircraft- and rocket-engine maker Snecma, is mulling offloading some of the state's millions of square feet of office space and, in a move tailor-made to please voters, cut 5,000 tax inspection jobs by 2007. But gold sales really raised eyebrows. Not since 1969 has the venerable 204-year-old Bank of France dipped into its stock, which the bank says sleeps in a vault nicknamed "The Subterranean" under its headquarters in central Paris. There, the ingots earn nothing. Sarkozy says money raised from selling gold could be invested, and the interest used to reduce France's debt or finance its future. "Is there any parliamentarian here who considers it natural and normal that these reserves produce no revenue whatsoever?" Sarkozy said Wednesday in parliament. French hands are to some extent tied by a March agreement between European banks, including France's, aimed at ensuring that they don't destabilize the gold market by all selling at once. The European Central Bank and 14 national central banks agreed that their combined gold sales will not exceed 500 tons a year over the next five years, starting in September. But Sarkozy told parliament that the European Central Bank has authorized France to sell 500 tons - about one-sixth of its hoard - over five years. That could earn 5 billion euros ($5.95 billion) which, when invested, would generate 200 million euros ($238 million) "where now we have none," said the finance minister. "Given France's budgetary situation, I would rather be on the side of the person who brings in 200 million euros in supplementary revenue without cheaply selling anything than on the side of those who dug the holes and emptied the coffers," he argued, shouting down critics who accuse of him of pawning France's wealth. Other European countries, including Italy, could follow suit if France sells, analysts say. Switzerland and the Netherlands have already been selling. The central Bundesbank in Germany, which has the world's second biggest holding, also is contemplating selling gold and has the option to sell up to 600 tons over five years under the March agreement. The United States, by far the world's biggest gold holder with more than 8,100 tons, has not given any indication that it plans to sell. Now would be a good time. Gold prices have hit 15-year highs this year and the metal traded at close to $400 per troy ounce on world markets Thursday. "It's an exodus. Gold doesn't have many official friends," said Andy Smith, an analyst with Mitsui Global Precious Metals in London. "This is a metal that's been subsidized for generations by taxpayers, keeping it in vaults off the market. It is coming to an end." For France, gold has been "an anti-dollar weapon. And here we are with it being chucked away," he added. "This is why what is happening now is so historic." --- Associated Press business writer David McHugh contributed to this report from Frankfurt, Germany.