To: Bill Murphy who wrote (3219 ) 1/29/1999 12:21:00 AM From: J.E.Currie Read Replies (2) | Respond to of 81003
Bill, I look forward to placing the face and your sound byte presentation. Hope you can find an opening to suspend the moment and thought. jec FWN: 094326 GMT New York Meeting Examines Gold's Monetary Role New York-Jan. 28-FWN--Gold's monetary role and its position as a reserve asset throughout the world were vigorously presented at a conference arranged by the Reinventing Bretton Woods Committee in New York this week. The 2-day event which set out to examine ways to strengthen international monetary cooperation attracted a number of distinguished speakers and delegates including the deputy finance minister of Germany; senior officials of the World Bank; and a large number of country directors of the IMF. Dick Ware, representing the World Gold Council's Public Policy Center in London, argued that the advent of the euro as the second major global currency could well pose problems for the international monetary system. "For the past 35 years, the dollar has faced no significant challenge," he said. "Now, however, the euro, representing as it does an economy almost as large as that of the U.S. and with extremely important capital markets, gives countries a real choice as to where they want to hold their reserves and what arrangements they might make for aligning their currencies," Ware added. Ware cautioned that the coexistence of two quasi-equal currencies could well lead to more instability, as when fashions changed, investors may forsake one and rush to the other. "If this were to prove the case," he said, "then this would be a very good reason why gold would benefit any portfolio. Its qualities make it negatively correlated with virtually any other financial asset and this improves the risk/reward balance." Ware went on to say that gold represents the second largest component of official sector reserves by value making up some 16% of total holdings. He said that the IMF holds substantial amounts of gold and it was, in fact, the third largest individual holder. Its Executive Board in 1995 agreed that there were extremely good reasons for continuing to hold gold -- not the least being that they were able to respond to unforeseen contingencies -- of which the arrival of the euro may be one. He reminded the audience that since an amendment to its articles in 1978, the IMF has forbidden its members to peg their currencies, in any way, to gold. "This is surely unnecessary," said Ware. "Gold will stand or fall on its own merits, which are many. Why should the IMF any longer be so dogmatic that it cannot allow its members to choose freely their currency arrangements?" The World Gold Council is an international organization formed and funded by leading gold mining companies from around the world to increase the demand for gold. The countries served by the Council account for approximately 80% of global gold demand. (c) Copyright 1999 FWN