Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: PaulM who wrote (6554)	1/22/1998 11:23:00 PM
From: gmweber	Read Replies (1) \| Respond to of 116762

Paul B. Milcetic Here is the full article: Three central banks hoard gold in case of euro disaster By Toby Helm, EU Correspondent, in Brussels - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Information on the German economy - Commerzbank German Federal Ministry of Economics - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - City: CBI chief in EMU alert to Germans THE Bundesbank is hoarding massive amounts of gold while its value falls because of fears among the German public that the European single currency might falter or collapse. Both Italy and France are also hanging on to huge quantities of gold, partly because of worries about economic instability after the launch of monetary union next year. One extreme theory is that banks are keeping gold in case they need to support a new national currency if the euro fails. Such concerns help to explain why Europe's "big three" central banks have been refusing to sell an ever- declining asset and may not hand over much of their gold as reserves to the future European Central Bank later this year, according to leading analysts. They say central banks and governments do not want to send out signals that might alarm the public before the switch to the euro on Jan 1, 1999. One German expert on Bundesbank monetary policy, Ulrik Dennig of Hamburg's HWWA economic insitutute, an organisation part- funded by the German government, said: "In Germany people are not very sure about the monetary union. They need to know that their money is stable. That is psychologically important for them. "Because of the need for stability it would be unwise for countries to be selling gold in the run up to monetary union or in its early stages. Once it has proved itself to be stable things might change." German attachment to its vast store of 3,700 tons of gold stems in large part from the country's experience with racing inflation in the 1920s, when gold was a safe haven for investors. Last year there was uproar in Germany when the government attempted to revalue the Bundesbank's gold reserves to bring its finances into line for single currency membership. This was seen by the German people as unwanted interference with the nation's assets by the government. When the European Central Bank is formed this summer, it is expected to hold about 15 per cent of its reserves in gold, less than 1,000 tons. The rest will stay with national central banks. Stephen Yorke, director of economic research at SBC Warburg in London, said that although many Europeans had an "emotional" attachment to gold, the real reason central banks were not selling despite gloomy predictions of gold's future value was that the modern gold- lending market allowed them to make a good return. But he said an alternative view was that central banks were keeping it to provide backing for a new national currency should the euro break up. regards gmweber