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

To: Mark Bartlett who wrote (33420)	5/7/1999 6:00:00 PM
From: goldsnow	Respond to of 116960

They have to show currency reserve...Torry would eat Labor alive... This is no win proposition.....Now imagine POG goes up....dollar down Pound will get skinned ..Wonder what Soros is thinking again about poor Brits :)

To: Mark Bartlett who wrote (33420)	5/7/1999 6:33:00 PM
From: goldsnow	Read Replies (2) \| Respond to of 116960

Treasury offloads gold reserves Gold: There is too much of the shiny metal about Britain is to sell off a big chunk of its gold reserves because what was once one of the world's most precious commodities is losing its value. The UK is selling 415 tonnes of its 715 tonnes of gold, around 10% of its total Treasury holdings, as it 'restructures' its reserves. This is more than half the treasury's hoard of gold, secured in vaults under the Bank of England. A UK Treasury spokesman said: "Our aim is to optimise and diversify our portfolio with a sensible risk return balance." The UK will buy more foreign currencies with the proceeds. The first tranche of 125 tons will be sold in the next year. Gold plunged by more than five US dollars an ounce as the market reacted to the news. It is now worth just over $280 a troy ounce. A troy ounce weighs 1.1 ounces. Gold was once one of the most valuable assets in the world but as more and more of the shiny metal swills around its value drops. Gold's falling standard Critically, for banks it now gives relatively poor returns and several have been selling off their reserves, including the Australians, Belgians, Dutch and even the Swiss. The International Monetary Fund is to consider selling off some of its gold to help fund debt relief for poorer countries. The significance of Switzerland is that its 2,600 tonnes of gold are the third-biggest reserve of holdings in the world, after the US and the eurozone area. Over the last 20 years bonds and shares have given better returns and many banks and finance institutions are now replacing gold with better yielding investments. The Swiss reckon the cost of lost interest in holding gold rather than US Treasury bonds is equivalent to around $400 a year per household. Tarnished reputation The value of gold has failed to keep pace with inflation, it has underperformed shares and bonds and has been expensive to store. Banks, like everyone else, are under pressure to improve the returns on their reserves. The European Central Bank has decided to hold only 15% of its reserves in gold, well below the 30% average of most of the countries in the eurozone news.bbc.co.uk What they do not tell you is that Exploration is virtually at the stop..Mines are getting closed...Production costs are high and US Bubble along with dollar are about to burst...

To: Mark Bartlett who wrote (33420)	5/8/1999 12:35:00 PM
From: Alex	Read Replies (2) \| Respond to of 116960

Managing Risk? The Bank of England publishes a journal, Financial Stability Review, which: "...summarises new developments in a clear and readable form, helps you understand the thinking behind regulatory changes, keeps you up to date with the latest research on financial risk management and informs you about changes to the structure of markets in which your firm operates." If so, I wonder if they have considered the risk management views of Terry Smeeton, ex-head of the Bank of England's foreign exchange division, who said in February 1998: "When measuring results over a reasonable period, for example the last 20 years rather than, say, the last five years (which is not a time period of relevance to the assessment of an asset with the properties of gold), then one finds some interesting results. Studies show that a gold component of close to 20% in a portfolio otherwise consisting of US dollars and Japanese yen provides a reserve composition exposed to the least risk. While it is the case that the benefits of a gold element of this size are reduced on a shorter term portfolio analysis, these are clearly based on the experience of relatively stable market conditions and make no allowance for crisis situations such as were experienced in earlier periods." What might be the consequences of reducing gold reserves? Let me quote Alan Greenspan: "Central banks can issue currency, a non-interest-bearing claim on the government, effectively without limit... To be sure, if a central bank produces too many, inflation will inexorably rise as will interest rates, and economic activity will inevitably be constrained by the misallocation of resources induced by inflation. If it produces too few, the economy's expansion also will presumably be constrained by a shortage of the necessary lubricant for transactions. Authorities must struggle continuously to find the proper balance..." "For most of the period prior to the early 1930s, obligations of governments in major countries were payable in gold. This meant the whole outstanding debt of government was subject to redemption in a medium, the quantity of which could not be altered at the will of government. Hence, debt issuance and budget deficits were constrained by the potential market response to an inflated economy." Remarks by Chairman Alan Greenspan at the Catholic University Leuven, Leuven, Belgium, January 14, 1997 Greenspan notes that without redemption in gold, central banks can issue too much many or too little paper currency. Of course, today gold reserves are held as assets without obligation to redeem, and since the bias today is towards maintaining liquidity, as that is seen as the means of preventing recessionary forces, the outcome is much more likely to be inflation. Kamin's fourth law of economics states: "Government inflation is always worse than statistics indicate: central bankers are biased toward inflation when the money unit is non-convertible, and without gold or silver backing" Baxter's Second Law of economics states: "The adoption of fractional gold reserves in a currency system always leads to depreciation, devaluation, demonetization and, ultimately, to complete destruction of that currency." The study at the following link presents empirical evidence that when central banks sell gold reserves, their country's currency will devalue a little more than 1/2% for every one percent of gold reserve reduction. As the Bank of England proposes to sell 415 tons of gold out of 717, i.e. 58%, the British pound stands to devalue by 29%. (thanks CMH) users.dircon.co.uk