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

To: kimberley who wrote (8512)	3/19/1998 3:28:00 AM
From: Abner Hosmer	Read Replies (1) \| Respond to of 116764

Kimberly - Yes, many of them do seem to be quite blase about it. Canada has had a policy for a number of years to sell off their gold reserves, and I think they've sold most all of them. Australia seemed to take the attitude that because they are a producing nation, reserves will be available to them if necessary. They didn't say how this would be arranged with their gold producers. Besides, one of those who sat on the board that made that decision and voted for it was the President of one of Australia's 10 largest listed companies, WMC, Western Mining, and he promptly hedged forward long before the sale was made public. Of course, there was no relation between either of his actions, he was going to hedge anyway:o] France and Germany have stated explicitly numerous times that they do not intend to sell any gold. Germany late last year approved provisions to make 10% of their reserves available for lease. POG had a good day recently when it was reported that one European central bank, probably the Dutch, had not rolled over a lease for 1 million oz. I believe that for the US to sell any reserves would require an act of Congress. If not explicitly, then certainly implicitly. >>He said the bank had made a profit on the sale, but this had been frozen on the bank's books and would not be used to cut the country's massive debt. Part of the proceeds belong to Luxembourg under the two countries' 76-year-old currency union. ''The 92 billion (francs) is a surplus which will be frozen on an unavailable account. It has got nothing to do with debt. It will have no effect on debt,'' he said.<< The only sense I get from this is that the proceeds will be retained on account as part of the reserve base, rather than being expended for one purpose or another. As you know, there are convergence criteria for those wishing to enter EMU and these include limits on deficit as a % of GDP. Those who make the rules made clear last year that they wouldn't permit any country to qualify by applying one-off sales of gold against the current budget deficit. However, those proceeds may be applied against the national debt, and apparently some countries have used proceeds from gold sales in this manner. Verplaetse was probably asked if Belgium would follow suit and apparently replied in the negative, that the funds would remain on account. I hope that others will correct me if I have erred in my interpretation. For further information on ECB management of reserves and the rules which will govern gold transactions, I recommend reading these 2 URL's in conjunction with one another. Andy Smith at UBS helps interpret some of the articles of Union governing reserve assets, and a more complete statement of the articles is available through the EU's web page: ubs.com europa.eu.int You seem to be an informed investor and since you've only recently come to gold, I'll take that as a bullish sign. Hope you'll share more of your insight with this forum. regards - Tom