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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: Bill Murphy who wrote (1992)	11/2/1998 4:54:00 PM
From: marcos	Read Replies (1) \| Respond to of 81023

I talk my book. You talk yours. They talk theirs. It's putting one's mouth where one's money is, I guess -g- They do seem to want people to hear their argument; commerzbank.com They have an article each month - I wonder what November will bring; commerzbank.com Remember me mentioning mfl #reply-6250741

To: Bill Murphy who wrote (1992)	11/2/1998 6:07:00 PM
From: sea_urchin	Read Replies (1) \| Respond to of 81023

Bill : In response to various comments about the Kommerzbank article, I feel it is necessary to respond and give my opinion on each paragraph. Overall, I do not see the article as a negative advert --- in fact, I see it as relevant and realistic. I don't see any hidden agenda or conspiracy. (My comments have been written in capitals) Central banks reduce their gold reserves The significance of gold as a reserve asset for central banks is on the decline. BUT, ONLY MARGINALLY SO With European monetary union just around the corner, several EU central banks have considerably reduced their holdings. One reason for this is that, overall, Euroland will require a lower level of reserves; the amount of gold to be deposited with the European Central Bank (ECB) is far less than is involved in the gold swaps within the European Monetary System (EMS). ALL THIS IS KNOWN AND HAS BEEN "FACTORED" INTO THE GOLD PRICE However, the gold price is unlikely to plunge as a result, since sales will be handled carefully and will be staggered so as not to create a glut; moreover, current prices are already close to the production cost. I THINK THIS IS VERY POSITIVE. IT SIGNIFIES THAT POG IS AT OR NEAR A FLOOR WHICH IS RECOGNISED BY THE EUROPEAN CBS. While some smaller EU countries have roughly halved their official gold reserves in recent years, the three with the largest holdings Germany, France and Italy have maintained theirs virtually unchanged, as have Spain and Portugal and also the UK. I THINK THIS IS VERY POSITIVE. THE LARGEST HOLDERS ARE STILL HOLDING By contrast, Sweden and non-European countries such as Canada and Australia have dramatically reduced their stocks. In 1997, Argentina converted practically all of its gold reserves into US dollars. I THINK THIS IS POSITIVE --- THE MARKET HAS ALREADY ABSORBED ALL OF THIS The launch of European monetary union could trigger further sales of gold. Up to now, EMS participants have deposited 20% of their gold and dollar reserves in a joint fund. As of January 1, 1999, these swaps will be terminated and countries will find that more gold is returned to them than they have to transfer to the European Central Bank. I DON'T SEE THIS AS A NEGATIVE, RATHER AN UNKNOWN For its initial endowment, the ECB needs the equivalent of less than a fifth of the existing foreign-exchange reserves, 15% of which is to be in the form of gold. The lion's share of reserves will remain at the disposal of the national central banks, which will be able to sell stocks with the approval of the ECB. In the long run, this is probably what a number of countries will do. But governments would be well advised to use the one-off gains realized through the release of Hidden reserves to redeem public debt rather than to fund current budget deficits. SO FAR THIS HAS NOT HAPPENED AND THE COUNTRIES COULD EASILY HAVE DONE IT As from next year, the Bundesbank will value its gold reserves at a level close to the market price. It has 95m ounces, plus the amount currently deposited with the ECB, still shown at DM14bn. Based on a market price of $280 an ounce, they would total DM47bn, which will tend to promote the idea of selling gold. Of course, this can only be justified several years from now, once monetary union is firmly established. I THINK THIS IS POSITIVE. THEY WISH TO PROTECT THE VALUE OF THEIR OWN ASSETS By maintaining gold reserves of 320m ounces, the eleven Euroland countries are forfeiting interest income equivalent to around $4.5bn per year. THIS HAS BEEN THE BRITISH ARGUMENT WHICH HAS BEEN AROUND FOR SOME YEARS ALREADY. NO REVELATION HERE As part of the ongoing debate on the future role of the International Monetary Fund, its gold reserves the second-largest in the world will certainly be subject to reappraisal. A precedent was set 20 years ago when the IMF disposed of around 30% of its stocks, with some being returned to the member states, while some were used to aid especially poor developing countries. IT'S EITHER SELL GOLD (WHICH IS UNLIKELY) OR PRINT MONEY (WHICH IS MORE LIKELY) In the medium to long term, the price of gold is unlikely to rise significantly. I SHARE THIS OPINION. ON MY ANALYSES, $350, OR SO, IS THE TOP (WITH CURRENCIES VALUED AS THEY ARE PRESENTLY) Industrial states and most developing countries seem committed to a policy of low inflation. IT SAYS "SEEM COMMITTED". THAT DOES NOT MEAN "ARE PERMANENTLY COMMITTED" And the massive depreciation of several emerging-market currencies will produce only a temporary change in this respect. THESE CURRENCIES ARE IRRELEVANT IN THE OVERALL GLOBAL PICTURE As a result, the use of gold as a store of value will probably seem increasingly anachronistic. "PROBABLY SEEM INCREASINGLY ANACHRONISTIC". I AGREE. THIS IS THE CONTRADICTION WHICH THE MARKET, AS A WHOLE, ADDRESSES ON A DAILY BASIS AND WHICH WE CONTINUALLY DISCUSS.

To: Bill Murphy who wrote (1992)	11/3/1998 1:22:00 AM
From: m.philli	Read Replies (1) \| Respond to of 81023

Hi Bill, heard anymore on Asian CB buying? It seems like we're heading towards 3 major trading currencies. The EURO, the DOLLAR for the AMERICAS, and eventually an Asian block currency. It would seem reasonable, for them all to carry approximately the same GOLD RESERVES. The best way to achieve this equality would be for Europeans to sell some excess, lend out lots and by lowering the price, cause producers to sell forward production, thereby providing Asia cheap access to the GOLD they will require. Once world gold reserves are re-allocated on a more equal basis, the gold price can be either lowered further, or increased at the whim of world CB's . As you can see, I haven't given up on my Asian buying theory, but for me to post on this site is like a teenager challenging WILLIAM F. BUCKLEY to a debate. Be gentle guys, just wanna play too. mike