Bundesbank president, hanging out at BIS, undercuts gold sales report

2:20p ET Sunday, January 11, 2003

Dear Friend of GATA and Gold:

GATA Chairman Bill Murphy's quot;Midasquot; commentary for
Friday, January 9, at the subscription site
LeMetropoleCafe.com has been posted in the clear at
Jim Puplava's quot;Financial Sensequot; Internet site here:

a href=http://www.financialsense.com/editorials/murphy/2004/0111.htmlhttp://www...

This quot;Midasquot; has a lot of intelligence about the
precious metals markets you're unlikely to find
elsewhere but note particularly GATA committee
member Ed Steer's contribution about the increase
in the Comex silver margin requirements and recent
huge changes in Comex silver inventories.

Meanwhile, Bloomberg News Service has picked up
a German Sunday newspaper story quoting Bundesbank
President Ernst Welteke on new plans for the
central bank to unload hundreds more tons of gold.
(We haven't yet been able to confirm an original
Internet link for the story, but it is appended
here anyway.)

GATA argues that the story should be taken with a
mine of salt, such as the one to which GATA expects
Welteke and other Western central bankers will be
dispatched on the coming day of political judgment.
For, most likely, the quot;salesquot; of gold about which
Welteke is speaking again are only the writing off,
at a discounted price, of more of the Bundesbank's
leased gold so as to avoid the short squeeze that
would result from the bank's demand for the gold's
return.

Remember also that central bank comments such
as those attributed to Welteke here have been
summoned often in the past when the gold price
has been in danger of getting beyond the control
of the central banks and they have sought to
panic gold futures contract holders.

In any case, you may get a kick from the Internet
site of the German newspaper in which the gold
sales story is said to have appeared. Welteke's
ideas seem to be in the company of some young
women who might be lovelier only if they were
adorned with baubles crafted from the gold the
Bundesbank seems unable to get rid of fast
enough:

a href=http://www.bild.t-online.de/BTO/index.htmlhttp://www.bild.t-online.de/BT...

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

* * *

Bundesbank Agrees to Sell
Up to 600 Tons of Gold, Bild Reports

NEW YORK, January 10 (Bloomberg) -- Bundesbank President
Ernst Welteke and the German government have agreed to
sell as much as 600 tons of the central bank's gold to
raise as much as 7 billion euros ($9 billion) for a fund
to promote education and research, Bild am Sonntag said,
citing unidentified government officials.

No one at the Bundesbank was available for comment on the
report when called by Bloomberg News.

From this year on, Germany will sell between 400 tons and
600 tons of the bank's 3,440 tons of gold at metal exchanges,
the Sunday newspaper said in an advance copy of an article in
tomorrow's edition. The interest on expected revenue of between
4 billion euros and 7 billion euros will go to universities,
it said.

The government expects the fund to generate interest income
of between 250 and 300 million euros a year, the paper said.
Chancellor Gerhard Schroeder has made improvements in
education one of his main goals for this year.

An agreement limiting central bank gold sales to 400 tons a
year, which has helped to stabilize prices, expires in eight
months. Welteke in September said he wants the option to sell
some of Germany's gold reserve, which equals 16 months of
global production and is second only to the U.S.'s 8,135 tons.

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----------------------------------------------------

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