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Is it time for another Plaza Agreement to balance international trade?
12:03p ET Sunday, December 19, 2004
Dear Friend of GATA and Gold:
Here's an English translation of the Reuters
dispatch in German, sent to you last night, about
the opposition within the Bundesbank to sales of
gold reserves. Thanks so much to our friends who
did the translating for us, especially since the
story is much more favorable to gold than we were
able to convey to you last night.
If the German newspaper on which the Reuters
report is based, Welt am Sonntag, is correct, the
Bundesbank's board is soundly opposed in principle
to any reduction of Germany's gold reserves, the
board has control over the decision, and the gold
sales the market has been expecting will not be
forthcoming.
I've not been able to locate the story on which
the Reuters dispatch is based, but if any of our
German-speaking friends feel ambitious, here is
Welt am Sonntag's Internet site:
A decision by the Bundesbank against selling its
gold reserves will be, in effect, a decision to
stop propping up the U.S. dollar, and thus it
also may be a decision against continuing to
subsidize America's domestic profligacy and its
unnecessary warmaking. Will this decision
encourage other nations to do the same?
Since this is Christmas, maybe we can hope.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
German Gold Sales Plan Rejected, Newspaper Says
From Reuters
Saturday, December 18, 2004
http://www.reuters.de/newsPackageArticle.jhtml?
type=economicsNews&storyID=640588§ion=news
BERLIN -- According to a report in the newspaper
World on Sunday, the president of the Bundesbank,
Alex Weber, has failed in his plans to sell gold
from the reserves of the Bundesbank by the end
of this year.
Six of the eight members of the Bundesbank's Board
of Directors turned down the plan, the newspaper
reported without identifying its sources. Further,
this majority has fundamental objections to sale
of gold reserves, which also puts into question
any future reduction of the reserves.
A spokesman for the Bundesbank declined to
comment on the newspaper report.
Weber had announced that the Board of Directors
would decide before the end of this year to what
extent the already secured option on gold reserve
sales of up to 600 tonnes over the next five years
would be exercised. The Bundesbank had secured
this option under the agreement of the 15 European
central banks, which want to gradually reduce their
gold reserves in a manner designed not to disturb
the market. The Bundesbank has 3,440 tonnes of
gold at its disposal; only the United States has
more.
Gold declined on Friday in a thin and volatile market.
The market has been tensely awaiting the details,
expected in the next few days, of the planned gold
sales by the Bundesbank, according to dealers. It
was expected that 120 tonnes per year would be
sold each year over the next five years.
The federal minister of finance, Hans Eichel, among
others, encouraged the sale of the gold reserves. The
sale of 120 tonnes per year would raise about 1 billion
euros, the minister told Bild am Sonntag, according to
an advance report. But he did not want to force the
Bundesbank into a sales decision. "That is the the sole
decision of the Bundesbank," Eichel said.
"Gold does not bear any interest, in contrast to the
money raised from gold sales, which would certainly do
so," the minister said. "I am eager to learn what the
Bundesbank will do."
The profit of the Bundesbank flows into the federal
budget. Eichel has budgeted for a 2 billion euro
contribution from the profits of the Bundesbank for
the 2005 annual budget, which should help Germany
for the first time in three years to hold its budget
deficit within the upper permitted limit of 3 percent
of GDP.
The high exchange rate of the euro to the dollar
harbors risks for the Bundesbank's profits.
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