Gold Forecaster
- Global Watch
Germany no gold sales in
2008 or in 2009 and why
Julian D.W.
Phillips
Gold Forecaster snippet
Oct 12, 2007
Some prominent commentators
on the gold market are giving the impression that Germany and
possibly Italy, will eventually be sellers of their gold, although
not in 2008, even stating that the Bundesbank is 'not opposed
to such sales', but simply need to agree the purpose for which
the proceeds will be used. These commentators even say, that
German gold sales will eventually begin. We could not
disagree more strongly!
The German Bundesbank under
the governorship of Axel Weber did not agree to the purpose for
which the government intended to use the proceeds, when they
pressed the Bundesbank to sell gold, which is correct while they
made it clear that they have not made gold sales 'verboten',
as a matter of policy. But don't confuse broad policy
with investment decisions.
We believe that they are opposed
to gold sales as Axel Weber clarified when he stated, "Gold
is a useful counter to the swings of the $". He clearly
agrees with the fact that gold is a fine counterweight to currencies
in the reserves of a nation. More so, since he made that statement
gold has performed wonderfully whereas the $ has performed abysmally,
thus confirming the correctness of his investment policy.
The matter of what to do with
the proceeds was not the issue that divided the Bundesbank and
the government it was the independence of the Bundesbank regarding
policy decisions, a far more important issue. What to do with
the proceeds is clearly spelt out in the rules governing the
Bundesbank. They are to be retained by the bank in their reserves.
The income on those is dispersible, but not the capital. As part
of the nation's reserves they are not there for research or social
program or for any political whim, they are reserves of the nation
for a rainy day. [And that day is getting closer by the day too]
Indeed, for the government
to instruct the Bundesbank what to do with the proceeds, they
have first to enact a new law to do so, which must gain the majority
agreement of the Reichstag, a seemingly unlikely possibility.
This has to precede any gold sales imposed on the Bundesbank
by the government.
Meanwhile right now, the Bundesbank
President can, if he so chooses to, sell Germany's gold any time
he wishes and keep the proceeds in the bank. But he has made
it clear he chooses not to, as is confirmed by the announcement
for 2008 on gold sales an investment policy decision he has made,
without being influenced by government. We believe he will make
the same announcement in 2008 covering 2009. In other words Germany
will not sell its gold because it would be a bad decision to
do so, so Bundesbank President, Axel Weber believes.
Italy to sell?
As to Italy being a
possible seller, the Banco d'Italia used simple uncomplicated
words when last asked if they would sell. They said, "We
have no plans to sell gold". Little there to confuse
one?
Yes, the Italian Parliament
did approve a plan allowing for the sale of gold to reduce the
National Debt, but as the E.C.B. stated very strongly, it is
they who make that decision not Italy. Again the transfer of
assets from the Central Bank to the government probably would
not be allowed under the existing Eurozone agreements.
Swedish gold sales
- now we know what lies ahead in the next two years.
In a new announcement,
Sweden said it plans to sell up to a further 10 tonnes of gold
by the end of September 2008 and invest in foreign exchange reserves.
Clearly the purpose is simply a statement of confidence in currencies
and not a wise investment decision.
Please subscribe to GoldForecaster
for the entire report.
Oct 5, 2007
-Julian
D.W. Phillips
email: gold-authenticmoney@iafrica.com
321gold Ltd
|
