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

To: long-gone who wrote (13849)	6/27/1998 6:27:00 PM
From: goldsnow	Respond to of 116779

Just metal? Just demand? May be not..!!! ANALYSIS-Russia needs aid from IMF, not pawn shop 09:59 a.m. Jun 26, 1998 Eastern By Peter Henderson MOSCOW, June 26 (Reuters) - Schemes for Russia to borrow billions of dollars against its precious metal reserves would not buy the commodity that Russia needs most right now -- confidence, analysts said on Friday. Russia is running out of credit after a rash of low-priced foreign bonds but, still desperate for funds, could look for better deals by borrowing against its precious metals reserves, they said. Jittery investors want to see cash from the International Monetary Fund, not the pawn broker, analysts said. Rumours are running rampant that Russia is borrowing on substantial reserves of palladium, a platinum group metal used in catalytic converters, and could do the same with its gold. The central bank stoked speculation on Thursday when a senior official told Interfax news agency that the bank might use palladium as collateral for a credit rather than selling it. Reserves are a state secret, but traders put palladium reserves at around $3 billion, and the central bank says it has about $5 billion in gold. There are also other gold reserves of unknown amounts. The central bank, which holds much of Russia's palladium reserves, has said it is selling the white metal in accordance with the law. Bank chairman Sergei Dubinin on Friday denied the existence of a secret decree, despite Russian media reports that such a decree exists allegedly allowing the bank to sell about $2 billion-$3 billion of palladium. Moscow would probably be asked to ship the metal to Zurich or another foreign destination if it used it for collateral. ''It is not good enough to have the metal in Moscow,'' said Tony Warwick-Ching, a metals analyst at Flemings Global Mining Group in London. Collateral-backed loans could mean fast money on good terms but analysts questioned whether that would be a good idea for Russia, scrambling to present a good face to falling markets. ''You get to the palladium thing and people say, what are they going to export next -- slave labour? It really may be seen as a sign of desperation at this point,'' said one senior economist at a Moscow bank. ''I guess the country is desperate but does not want to be seen as desperate for obvious reasons, because it puts more pressure on the rouble.'' Russia could also try to mobilise other natural resources, such as oil, natural gas and diamonds, but to a limited degree. Oil companies especially have already taken out credits on future exports, which in any case are not owned by the state. The government is in a tight spot with billions of dollars in domestic debt coming due next month. It has just issued two Eurobonds worth $3.75 billion at low prices, damaging its own market. Fears about Moscow's commitment to reform and the threat on Thursday of a bond from the City of Moscow sent Russian foreign spinning and ripples were felt on the domestic market on Friday. The ministry has said it does not intend more borrowing for a few weeks but cash foreign reserves are around a low $11 billion, or $16 billion when gold is included. Another billion dollars here or there from reserves-backed loans would not change Russia's position and could hurt its name. ''Anything like this is just piecemeal and it is not going to restore confidence,'' said Peter Boone, co-director of research at Moscow investment bank Brunswick-Warburg. ''You need at least $10 billion and signals that more is coming and more is available if needed,'' he said, referring to hopes of a $10 billion-$15 billion IMF package. ''Small amounts of money just go into reserves... you just allow a few more investors to convert their money out at the current exchange rate. But you don't solve the underlying problem.'' ((Moscow Newsroom, +7095 941-8520 moscow.newsroom+reuters.com)) Copyright 1998 Reuters Limited.