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Reserve bank's gold sale cost Australia $5 billion
By Paul Cleary
The Australian, Sydney
Tuesday, January 11, 2011
http://www.theaustralian.com.au/news/nation/reserve-banks-gold-sale-cost...
The Reserve Bank [of Australia] sold most of the nation's gold reserves more than a decade ago because the board believed its price would remain flat.
They believed also that the commodity would not play a role in a future financial crisis.
The decision to sell 167 tonnes of the bank's reserves has cost the nation about $5 billion based on today's soaring price of almost $1,400 an ounce.
A board paper recommending the decision to sell conceded that gold served as "insurance against a breakdown in the international financial system", but it then dismissed the need for holding this valuable asset. The paper has been obtained by The Australian under freedom-of-information laws.
The paper also said Australia need not worry about selling the assets because it had vast reserves of the commodity, yet the latest figures from Geoscience Australia show that known reserves will be exhausted with 30 years.
... Dispatch continues below ...
Prophecy Receives Permit To Mine at Ulaan Ovoo in Mongolia
VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY, OTCQX: PRPCF, Frankfurt: 1P2) announces that on November 9, 2010, it received the final permit to commence mining operations at its Ulaan Ovoo coal project in Mongolia. Prophecy is one of few international mining companies to achieve such a milestone. The mine is production-ready, with a mine opening ceremony scheduled for November 20.
Prophecy CEO John Lee said: "I thank the government of Mongolia for the expeditious way this permit was issued. The opening of Ulaan Ovoo is a testament to the industrious and skilled workforce in Mongolia. Prophecy directly and indirectly (through Leighton Asia) employs more than 65 competent Mongolian nationals and four expatriots. The company also reaffirms its commitment to deliver coal to the local Edernet and Darkhan power plants in Mongolia."
The Ulaan Ovoo open pit mine is 10 kilometers from the Russian border and within 120km of the Nauski TransSiberian railway station, enabling transportation of coal to Russia and its eastern seaports. Thermal coal prices are trading at two-year highs at Russian seaports due to strong demand from Asian economies.
For the complete press release, please visit:
http://prophecyresource.com/news_2010_nov11.php
The RBA revealed in July 1997 that over a six-month period, it had sold 167 tonnes, reducing Australia's reserves to just 80 tonnes. At this time, the value of its gold assets fell from $3.6 billion to about $1.1 billion.
The RBA's sales pushed the world gold price down to an 11-year low, returning just $2.4 billion for the gold that was sold via a single broker engaged without a tender.
The same amount of gold would be worth about $7.4 billion today.
The decision to sell the reserves was approved by then-RBA Governor Ian Macfarlane and then-Treasurer Peter Costello.
The paper justified the decision to dramatically reduce the bank's holdings by arguing that gold had been a poor investment, and that Australia need not worry about access to financial markets during another economic crisis.
Since this decision, the world financial system has suffered severe stress, first with the dotcom bust in 2000, then the 9/11 attack the following year, and, more recently, the near-collapse of the global financial system in 2008.
The spectacular rise in the price of gold in recent years shows that it is clearly playing a role in the GFC and its aftermath.
The RBA's public statement was co-signed by Ric Battellino, who is now deputy governor of the bank. At the time, he served as assistant governor for financial markets.
The RBA paper noted at the time that gold holdings in the US and Europe remained high, with the US holding 75 per cent of its reserve assets in gold.
"Central banks traditionally hold gold because of its ability to be used in the event of a crisis in the international financial system; it is the only reserve asset that is not a claim on some other government, international institution or bank. However, over the past two or three decades, the world has experienced a number of economic 'crises,' but gold played no part in coping with them," the paper said.
The paper argued that continuing development of financial system meant that circumstances which would require Australia to call upon our gold holdings for economic reasons looked increasingly remote.
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Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit,
Extending the Mineralization of the Southwest Vein on the Property
Company Press Release, October 27, 2010
VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:
-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.
-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.
-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.
Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."
For the company's full press release, please visit:
