More moronic gold market 'analysis'

11:30a ET Wednesday, April 1, 2009

Dear Friend of GATA and Gold:

The Agence France-Presse story appended here about another sale of gold by the European Central Bank fairly reeks of negligence in journalism and financial analysis, speculating on all sorts of possible reasons for the sale except the most plausible: to suppress the competitive currency and government currency systems teeter under incompetence management. As central banks around the world contrive unfathomable sums of money into existence, it could not be more moronic to suggest, as an "analyst" here does, that central banks might be selling gold to earn a profit. But that is indeed the caliber of most reporting and analysis of the gold market. Of course it's not reporting and analysis at all: It's active disinformation.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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ECB Sells 35.5 Tonnes of Gold

From Agence France-Presse
via Yahoo News
Wednesday, April 1, 2009

http://uk.news.yahoo.com/18/20090401/tbs-ecb-sells-35-5-tonnes-of-gold-b...

The European Central Bank said Wednesday that it had completed sales of 35.5 tonnes of gold under the terms of a 2004 central bank agreement.

While the ECB did not provide financial details of the sale, with gold prices at around $920 an ounce, the latest sales would have a value on the order of $1.15 billion.

Analysts said they could only speculate on what the money raised might be used for, while noting that the sales were part of a normal procedure.

Among the possibilities were funding for International Monetary Fund assistance to countries in need and compensation for losses the ECB might face in connection with the bankruptcy of US investment bank Lehman Brothers in September or the collapse of the Icelandic banking sector that followed.

Barclays Capital analyst Thorsten Polleit told AFP that profits on the book value of gold holdings are recorded as a liability as unrealised capital gains on the ECB's balance sheet.

"If you sell the gold you actually realise these gains and they would of course increase your profit," he explained.

ECB directors might also "think other assets are more attractive in terms of the yield of the return" than gold, which has fallen off recent peaks, Polleit suggested.

An ECB spokesman told AFP the bank could provide no more information on the operation.

UniCredit chief eurozone economist Aurelio Maccario said the sales were an operation that was probably planned in advance, but added: "Clearly the ECB is accumulating ammunition for further unconventional measures they will decide to undertake."

The central bank is expected to cut its key interest rate below the current all-time low of 1.50 percent on Thursday, and analysts say it could also decide to venture onto new ground -- such as the eventual purchase of corporate debt -- as it seeks ways to ease a deepening recession.

The gold sales, which were completed on Tuesday, conformed to the Central Banks' Gold Agreement of September 27, 2005, that limits gold sales to 500 tonnes per year during the period between 2004 and 2009.

It was signed by 15 European central banks, including the ECB, and followed an agreement reached in 1999 called the Washington Accord, in which European central banks agreed to an annual sales limit of 400 tonnes per year to prevent gold prices from plunging.

At the time, gold was worth around $260 an ounce.

In early July 2008, the ECB said it had sold 30 tonnes of gold under the terms of the agreement.

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