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

To: Jim McMannis who wrote (10399)	4/22/1998 1:49:00 PM
From: Alex	Read Replies (1) \| Respond to of 116764

BT 1 APR 1998 BONN Buba seen transferring gold to new Euro central bank THE Bundesbank, which must provide about one-third of reserves of the new European Central Bank (ECB), may decide to transfer most of its share in gold, providing a windfall for the German budget, analysts said. Such a move would raise public confidence by backing the new currency with gold, and would support gold prices by reassuring investors the Bundesbank won't sell excess reserves on the market, an analyst said. In addition, the transfer would be recorded at market prices, whereas the gold is now valued at less than one-third its market value. That would mean a multibillion-mark paper gain the government could book against debt. "It would be a neat move," said Alison Cottrell, economist at PaineWebber International in London. "There's the psychology factor of the ECB holding gold, the government would benefit from a revaluation and it should, at the very least, put a floor under the gold price." The European Central Bank will go into operation on Jan 1, the same day the euro becomes the currency for an expected 11 nations. Germany, because it's the European Union's largest economy and most populous country, will have to provide about one-third of the 50 billion Ecus (S$86.5 billion) the new bank will need in its role to set monetary policy. The Bundesbank, Europe's largest holder of gold, has around 95 million ounces, valued on its books at 13.7 billion marks (S$11.9 billion). The market value is about 55 billion marks. A Bundesbank spokesman wouldn't comment on what the central bank's plans are, saying that won't happen until the member states for monetary union are named and the members of the European Central Bank are appointed. -- Bloomberg