You are here
Keith Barron: Rigging the gold market is nothing new
Canada Resists British Plan
to Revalue IMF Gold Reserves
ByBarrie McKenna
The Globe & Mail, Toronto
Monday, October 4, 2004
http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/2004100
4/RWORBANK04/TPBusiness/?query=IMF
WASHINGTON -- Canada has thrown up a major
new roadblock to a debt-cancellation deal for the
world's poorest countries by vigorously resisting a
British plan to inflate the value of the International
Monetary Fund's vast gold reserves.
Finance Minister Ralph Goodale said Ottawa wants
guarantees the plan won't undermine gold mining
companies in Canada and elsewhere. He and
other finance officials from around the world met for
three days of talks in Washington, where the World
Bank and the International Monetary Fund were
holding their annual meetings.
"We need absolute assurances that [revaluing the
gold] should not be disruptive to the international
gold industry or international markets for gold,"
Mr. Goodale told The Globe and Mail.
"It must be handled in a way that does not cause
disruption to the gold mining industry in Canada."
Mr. Goodale made the comments after the IMF's
top policy-making group failed on the weekend to
finalize a deal to cancel billions of dollars worth of
debt owed by the world's poorest countries.
Also at the meetings, officials expressed growing
concern that $50 (U.S.)-a-barrel oil could unravel
an otherwise improving global economic outlook.
Coming into the twice-yearly gathering, there had
been growing optimism among aid groups that the
world's wealthiest countries would strike a new
debt-relief deal, possibly even agreeing to wipe
out 100 percent of the debts.
But a communiqu released Saturday by the IMF's
international monetary and financial committee
made no mention of the gold plan or debt
cancellation. On Friday, Canada and other Group
of Seven industrialized nations pledged only to
report back by year-end on the progress of their
debt-relief efforts.
"The committee has decided that further work on
this must be done so that we have a proper
framework for debt sustainability," said British
Finance Minister Gordon Brown, who chairs the
panel.
Speaking to reporters, Mr. Brown said there is now
a "growing consensus" that 100-per-cent debt
cancellation should be the ultimate objective. But
working out details could delay a final agreement
into 2005, he conceded.
After the meeting yesterday, Mr. Brown, along with
South African Finance Minister Trevor Manuel, flew
back to Ottawa with Mr. Goodale for a dinner
meeting with Canadian Prime Minister Paul Martin
to discuss African debt.
As with previous meetings, the sometimes divergent
interests of countries at the table frequently intruded
on efforts to achieve broader common goals.
As one of the world's leading gold producers, Canada
could be a significant loser if a move by the IMF to
recalculate the value of its gold reserves at prevailing
market prices destabilizes the market. The IMF
values its reserves at a fraction of the market price,
which is now at roughly $420 an ounce.
Anything causing more gold to go on the market
would depress prices and hurt the profitability of
gold-mining companies, which pay significant
royalties and taxes.
Some critics have suggested that Canada is being
hypocritical because its own central bank has been
busily dumping gold reserves in recent years, and
that also has a dampening effect on the price of gold.
The IMF's 103 million ounces of gold is one of the
biggest stashes of the precious metal in the world.
Several countries expressed concern that the
gold-revaluation plan could undermine the long-term
financial stability of the IMF and the World Bank.
Canada was far from alone in its opposition to
elements of a debt-relief deal. France and Germany,
for example, have expressed reservations about U.S.
proposals to put the elimination of Iraq's $120-billion
debt on a fast-track ahead of many needier countries.
Mr. Goodale pointed out that nearly all countries at
the meetings agreed that anything they do collectively
must involve more than just paper shuffling -- that it
must put cash in the hands of poor countries. Debt
relief should also treat all countries equally, encourage
economic reforms, and not undermine the stability of
the IMF and its sister organization, the World Bank,
he said.
Mr. Goodale acknowledged that progress in global
financial talks can sometimes be "slow and painful"
-- a frustration often expressed by Mr. Martin during
his long tenure as finance minister.
Nonetheless, Mr. Goodale suggested a little work was
done at the meetings toward a new debt-relief regime.
He also said that Canada's objections to the
gold-revaluation plan were largely "technical," and
could be overcome pending further study.
The other major item on the agenda of the weekend
meetings was the surprising recent increase in U.S.
crude oil prices, which closed Friday above $50 a
barrel for the first time.
The IMF pledged to come to the aid of countries
battered by higher oil prices. G7 finance ministers
called Friday for oil-producing countries to boost
output, and appealed for more efficiency by
consuming countries.
"Downside risks to the recovery have recently
increased, stemming in part from the increase and
volatility in oil prices," the IMF said in a statement
released Saturday. "These reflect geopolitical
tensions, strong global demand, and market
dynamics. The IMF stands ready to assist
members that may be adversely affected."
Britain's Mr. Brown told reporters that the world
needs oil price stability and "reasonable prices."
Meanwhile, Mr. Goodale warned that it could be at
least two to three months, and perhaps longer, before
the United States reopens its border to Canadian
cattle and certain beef products. Mr. Goodale, who
raised the issue during a meeting Saturday with U.S.
Treasury Secretary John Snow, said the two sides
have agreed to sit down for talks in a "couple of months."
----------------------------------------------------
To subscribe to GATA's dispatches, send an e-mail to:
gata-subscribe@yahoogroups.com
To unsubscribe, send an e-mail to:
gata-unsubscribe@yahoogroups.com
----------------------------------------------------
RECOMMENDED INTERNET SITES
FOR DAILY MONITORING OF GOLD
AND PRECIOUS METALS
NEWS AND ANALYSIS
Free sites:
http://www.cbs.marketwatch.com
http://www.capitalupdates.com/
http://www.silver-investor.com
http://www.thebulliondesk.com/
http://www.goldismoney.info/index.html
http://www.minersmanual.com/minernews.html
http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
http://www.investmentrarities.com
http://www.kuik.com/KH/KH.html
(Korelin Business Report -- audio)
http://www.plata.com.mx/plata/home.htm
(In Spanish)
http://www.plata.com.mx/plata/plata/english.htm
(In English)
Subscription site:
http://www.lemetropolecafe.com/
Eagle Ranch discussion site:
http://os2eagle.net/checksum.htm
Ted Butler silver commentary archive:
http://www.investmentrarities.com/
----------------------------------------------------
COIN AND PRECIOUS METALS DEALERS
WHO HAVE SUPPORTED GATA
AND BEEN RECOMMENDED
BY OUR MEMBERS
Blanchard & Co. Inc.
909 Poydras St., Suite 1900
New Orleans, Louisiana 70112
888-413-4653
http://www.blanchardonline.com
Centennial Precious Metals
3033 East 1st Ave., Suite 403
Denver, Colorado 80206
www.USAGold.com
Michael Kosares, Proprietor
US (800) 869-5115
Canada 1-800-294-9462
European Union 00-800-2760-2760
Australia 0011-800-2760-2760
cpm@usagold.com
Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
www.ColoradoGold.com
Don Stott, Proprietor
1-888-786-8822
Gold@gwe.net
El Dorado Discount Gold
Box 11296
Glendale, Arizona 85316
http://www.eldoradogold.net
Harvey Gordin, President
Office: 623-434-3322
Mobile: 602-228-8203
harvey@eldoradogold.net
Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
http://www.gloomdoom.com
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889
gwestgaard@investmentrarities.com
Kitco
178 West Service Road
Champlain, N.Y. 12919
Toll Free:1-877-775-4826
Fax: 518-298-3457
and
620 Cathcart, Suite 900
Montreal, Quebec H3B 1M1
Canada
Toll-free:1-800-363-7053
Fax: 514-875-6484
http://www.kitco.com
Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
Merrimack, New Hampshire 03054
www.certifiedcoins.com
Ed Lee, Proprietor
1-800-835-6000
leecoins@aol.com
Miles Franklin Ltd.
3015 Ottawa Ave. South
St. Louis Park, Minn. 55416
1-800-822-8080 / 952-929-1129
fax: 952-925-0143
http://www.milesfranklin.com
Contacts: David Schectman,
Andy Schectman, and Bob Sichel
Missouri Coin Co.
11742 Manchester Road
St. Louis, MO 63131-4614
info@mocoin.com
314-965-9797
1-800-280-9797
http://www.mocoin.com
Resource Consultants Inc.
6139 South Rural Road
Suite 103
Tempe, Arizona 85283-2929
Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877
Metalguys@aol.com
Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
http://www.swissamerica.com
Dr. Fred I. Goldstein, Senior Broker
1-800-BUY-COIN
FiGoldstein@swissamerica.com
----------------------------------------------------
HOW TO HELP GATA
If you benefit from GATA's dispatches, please
consider making a financial contribution to
GATA. We welcome contributions as follows.
By check:
Gold Anti-Trust Action Committee Inc.
c/o Chris Powell, Secretary/Treasurer
7 Villa Louisa Road
Manchester, CT 06043-7541
USA
By credit card (MasterCard, Visa, and
Discover) over the Internet:
http://www.gata.org/creditcard.html
By GoldMoney:
http://www.GoldMoney.com
Gold Anti-Trust Action Committee Inc.
Holding number 50-08-58-L
Donors of $750 or more will, upon request,
be sent a print of Alain Despert's colorful
painting symbolizing our cause, titled "GATA."
GATA is a civil rights and educational
organization under the U.S. Internal Revenue
Code and contributions to it are tax-deductible
in the United States.
