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

To: Michael Olds who wrote (30934)	3/31/1999 11:41:00 AM
From: Stephen O	Respond to of 116973

Swiss Central Bank's Gold Lending Almost Doubles (Update1) 3/31/99 9:31 Zurich, March 31 (Bloomberg) -- Switzerland's central bank said it almost doubled the amount of gold it loaned out last year, the latest sign of the bank's changing view of its gold holdings, the third-largest in the world. The Swiss National Bank's gold lending rose to 187 metric tons last year from 99 tons in 1997, the bank said in its annual report. Central banks lend gold to earn interest on their holdings. Gold loans from central banks have been increasing as banks view their gold holdings as a source of profit, rather than an emergency store of wealth. The Swiss bank has long had one of the world's most conservative gold policies, keeping its gold under wraps as other central banks sold and lent their reserves. The bank only began lending its gold in 1997 and is now talking about selling some of its reserves. That could push down gold prices, which fell to a 19-year low in August. ''This is grinding down the possibility of denial for those who suggest central banks don't want to sell their gold,'' said Andy Smith, an analyst at Mitsui & Co. in London. Gold for immediate delivery was little changed at $279.65 an ounce in London. Last week it fell to $278.95 an ounce, the lowest price in seven months. Switzerland will hold a referendum on April 19 to decide if the country's constitution should be changed to allow the central bank to sell its gold. The Swiss government said today that if voters approve, sales of the bank's gold could begin as soon as the spring of 2000, earlier than had been expected. Finance Minister Kaspar Villiger said last month he didn't expect sales to start before the end of 2000. Switzerland wants to sell about 1,300 metric tons, or half its reserves, over a period of years. This is the first time the government has spelled out conditions for the sales. ''The more the Swiss remind the world they're going to sell their gold demonstrates in neon lights what the end result is going to be,'' Smith said. The fact that the news is coming out slowly is ''water torture'' for the gold market, he said. --Mark Deen in the London newsroom (44) 171 330 7448 and Parris Kellermann in the Zurich and reporting by Andreas Britt in Bern/cs