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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: philv who wrote (21959)	11/23/2004 10:59:48 AM
From: sea_urchin	Respond to of 80970

Phil > It seems to me that if one can correctly assess the China factor, it can go a very long way to guide one's investment decisions for a long time With Canada's resources, I don't think you have to worry. China will be looking for Canada.

To: philv who wrote (21959)	11/24/2004 5:33:24 AM
From: GUSTAVE JAEGER	Respond to of 80970

Re: Yes, it is good to read something along the lines that I have been privately speculating on. But one never knows for sure, because the whole affair is always kept in such secrecy. It makes one wonder why, which leads one to various other conclusions. Well, actually, it's not THAT secret.... Date : August 23, 2004 Rise In Oil Price May Trigger Re-Balance Of Gold In Chinese And Japanese Reserves. Remember a couple of years ago, every time the price of gold started to move a man called Ernst Welteke, head of Germany’s central bank, the Bundesbank, used to pop out of his hole and try to put a stop to it. Here is an extract from an article published on Minesite in February 2002. “Assuming that there are no subtle nuances in the translation, what Ernst Welteke the president of the Bundesbank in Germany actually said last week was, “ We have significant gold reserves in the Bundesbank, and of course we are happy if the gold price rises. That shows you should not sell gold at the wrong time. At the moment there is an agreement between the central banks limiting the price of gold. That is sensible, since if we all sold central bank gold the price would plummet. That would not be sensible. But I could imagine that we might slowly sell some of this gold and reinvest in assets that pay interest. We should not sell the gold reserves to pay off federal debt or finance new spending. At best we should use the interest to reduce the debt.” It said everything , or nothing, depending on one’s viewpoint. Essentially it was a threat that Germany might decide to sell a lot of gold and hit the price hard, but it omitted to refer to the Washington Agreement of 1999 whereby the European participating banks agreed to limit gold sales to 400 tonnes/year. Ernst made similar comments on a number of occasions, but eventually everyone got the measure of him and gold tended to go up rather than down when he spoke. By that time he had ended his useful life and he was dropped in the mire. Certain information was given to the Bundesbank which caused it to investigate a freebie in Berlin enjoyed by Ernst and family at a very expensive hotel. It turned out to be Dresdner Bank and Ernst had to retire. No suggestions that Dresdner was using Ernst, but the relationship was murky. Now we get gold on the trot again and Christian Noyer, the governor of the bank of France, comes out with another of those ambivalent comments. According to Reuters he said, in an interview with the German business daily Handelsblatt, “ The Bank of France is not ready to sell some of its gold to finance outright the French national budget. That is out of the question either directly or indirectly.” Back in June Noyer said that the Bank of France does plan to sell some 500 to 600 tonnes of its gold reserves but not before late 2004. He went on to say that when the central bank does sell any of its gold reserves, the proceeds would be invested in interest-bearing instruments and only the profits from those investments would be used for the state budget. Nothing very mind blowing in that, bearing in mind that France is one of the signatories to the renewal of the 1999 Washington Agreement which comes into force next month. It could have been simply a shot across the bows of politicians as Noyer then claimed that the finance minister was in agreement with him. On the other hand the point of the comment has to be queried. The Bank of France could only sell 500 to 600 tonnes of gold from its reserves by late next month if all the other European central banks agreed that that they would sell nothing for the next year. That looks less than likely , so maybe he was misquoted. Another rather murky episode, but it leaves the impression that central bankers cannot bear to see gold performing better than their beloved bits of paper. On to the good news. The latest figures released by the World Gold Council show that net selling by central banks in the June quarter was half that of the same period in 2003. The signatories to the Washington Agreement sold some gold, but no more than expected. Switzerland sold 68 tonnes, Portugal 35 tonnes and Germany sold a small amount for coin minting. On the other hand Argentina bought 42 tonnes during the first six months of the year. The countries to keep an eye on now are those which have a small percentage of their reserves in gold and large holdings of US debt. How long are they going to accept the pain of a steadily depreciating US dollar? Two countries that stand out are China and Japan In the latest figures released by the WGC China holds 600 tonnes of gold which is only 1.7 per cent of reserves and Japan has 765.2 tonnes which is 1.2 per cent. Any attempt by them to move towards the 40 per cent gold backing most European countries have in their reserves would cause chaos on the market, but in January this year the finance minister of Japan suggested that it would be wise if Japan brought its gold holdings towards the levels more consistent with those of other industrialised nations. Japan, also, it should be noted, was an additional signatory to the Washington Agreement. China has kept very quiet, but that is something at which China is very good. Evidence of buying by these two countries in the second half of the year will be monitored very carefully. Effectively they hold the financial future of the US in the palms of their hands and conclusive evidence that Bush’s unwarranted invasion of Iraq has upset the world oil price may just tip the balance. minesite.com