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: Bobby Yellin who wrote (21688)	10/15/1998 8:11:00 AM
From: cool	Read Replies (1) \| Respond to of 116753

WORLD GOLD COUNCIL: SWISS GOLD SALES UNLIKELY BEFORE 2001 WORLD GOLD COUNCIL: SWISS GOLD SALES UNLIKELY BEFORE 2001 New York-Oct. 15-FWN--GOLD SALES BY THE SWISS NATIONAL Bank (SNB) are unlikely to occur before the year 2001, if at all, and even then are expected to be in relatively modest amounts, a study published this week by the World Gold Council said. Gold forms 40% of Switzerland's central bank reserves and Switzerland's federal constitution requires a partial gold backing for the Swiss frame, which has consistently proved to be one of the world's strongest and most stable currencies. But this arrangement is now being questioned, the study noted. Two Swiss government-appointed committees of experts have issued recommendations designed to give constitutional guarantees to the independence of the SNB. They have proposed the introduction of temporary legislation, which would reduce the country's gold reserves from 40% to 25% of the total and also proposed an upward revaluation of the SNB's gold reserves. In an independent analysis of the constitutional and political background, Mark Duckenfield, a political scientist at Harvard University, defines the legal and constitutional difficulties of preparing for gold sales from the SNB. He argues that these obstacles make it unlikely that sales can take place within the next three years. Furthermore, public anxiety over the eroding of the Swiss gold reserves will help ensure that any sales are modest and take place over a 10- to 12-year period. In his report, commissioned by the World Gold Council, Duckenfield says currently gold sales by the SNB are forbidden by the Swiss constitution, which will need to be changed to make any sales possible. This will require a national referendum in which both a majority of individual voters nationally and voters in a majority of the 24 cantons (regions) of Switzerland will need to be in favor. Given the sensitivity and complexity of the issue, that cannot be viewed as a foregone conclusion; especially as a separate poll of Swiss attitudes to gold sales, conducted in August this year, showed very substantial support for the SNB to maintain significant gold reserves. "This paper puts events in Switzerland in their proper perspective," said Robert Pringle, head of the World Gold Council's Centre for Public Policy Studies. "The initial horror stories, of a tidal wave of Swiss gold deluging the marketplace, collapse under careful scrutiny. Even the more modest stories of a sale of 500 tons inaccurately suggest large gold sales will occur over a brief period of time. "While the SNB may be permitted legally to sell gold by the early part of the next century, the calamities envisioned by some market commentators will not be realized and, specifically, to the extent that Switzerland does sell gold, it will not be realized and, specifically, to the extent that Switzerland does sell gold, it will be in modest quantities over a period of 10 to 20 years," Pringle added. * end of story *

To: Bobby Yellin who wrote (21688)	10/17/1998 1:31:00 PM
From: goldsnow	Read Replies (4) \| Respond to of 116753

Volatilities add weight to gold safe haven claim 11:27 a.m. Oct 16, 1998 Eastern By Patrick Chalmers LONDON, Oct 16 (Reuters) - Violent swings in world stock markets, currencies and bonds, and the white-knuckle rides they entail, have shored up the case for gold as an investment haven, analysts said on Friday. Thursday's four percent hike in the Dow Jones industrial average, a knee-jerk hurrah after the U.S. Federal Reserve's surprise interest rate cut, had simply added weight to the argument, they added. Others disagreed, saying gold had failed to shake off its Cinderella status during other periods of financial uncertainty and would disappoint once again this time. Mitsui commodities analyst Andy Smith said gold's recent performance versus stocks, bonds and foreign exchange made it an increasingly attractive insurance policy. He pointed to Thursday's closing values for 20-day historic volatilities in dollar/yen, the Dow, the U.S. long bond and gold as evidence of the metal's new-found respectability. Most volatile was dollar/yen at 31.3 percent followed by the Dow at 28.8 percent, the U.S. long bond at 24.3 percent and gold at 15.4 percent. Smith said investors should nevertheless beware of those pushing gold as a financial cure-all, drawing a parallel between the current world financial contagion and Europe's bubonic plague outbreaks during the Middle Ages, ''Like clergy in the plague years, who pushed a 'pessimistic view of man's fate in order to prove the need for salvation', apocalypse peddlers should be treated with disinfectant. ''But suddenly gold looks cheap, if crude, insurance against financial pestilence, barely half the historic volatility of forex, bonds or Wall Street,'' he added. Lawrence Eagles, broker GNI's head of commodity research, said Russia's debt default last July had caused the turnaround in gold, helping it rise from August's 19-year low near $270.00 a troy ounce back to $300.00. ''People are buying gold because there's the possibility of a serious collapse in the monetary system,'' he said, adding that two U.S. rate cuts and a bail-out package for Japan's indebted banking sector had prevented it going even higher. Gold's relentless fall to August's low, the result of central bank gold sales and knock-on sales by mines and hedge funds, made people reluctant to trust it, Eagles said. But that could change if financial problems spread to say Brazil, he said, where a currency collapse would pose a real threat to the U.S. economy. Peter Hillyard, commodity trading group vice president with Bank of America, remained cool to gold's potential, saying it should play only the smallest part in a diversified portfolio. ''I think that as a risk diversifier, gold is not it. If I were asked by someone to recommend a number that would be a low one, less than one percent, less than even half a percent. ''We have seen more investor interest in the last few weeks than we have seen for a long time but they have not been all over us like cheap suits,'' he said. Peter Dixon, senior economist with Germany's Commerzbank in Frankfurt, agreed, saying fears about European central bank sales continued to dog gold. ''In this day and age - the era of cyber money - gold does not really play a big role in the world economy,'' Dixon said. He favoured European or U.S. government securities as the best insurance option, despite recent volatility. ''If we are heading for a period of low inflation or even deflation, that would seem to be the sensible option,'' he said. ((London Newsroom +44 171 542 8057. london.commodities.desk+reuters.com)) Copyright 1998 Reuters Limited.