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European Central Banks Renew Gold Sales Agreement
By: Peter Spina, Gold Seeker


-- Posted Tuesday, 9 March 2004 | Digg This ArticleDigg It!

 

On March 8th, 2004, fifteen Central Banks entered into a new, gold sales agreement effective September 27, 2004. Per the press release, the participating institutions made the following statement:

  1. Gold will remain an important element of global monetary reserves.
  2. The gold sales already decided and to be decided by the undersigned institutions will be achieved through a concerted programme of sales over a period of five years, starting on 27 September 2004, just after the end of the previous agreement. Annual sales will not exceed 500 tonnes and total sales over this period will not exceed 2,500 tonnes.
  3. Over this period, the signatories to this agreement have agreed that the total amount of their gold leasings and the total amount of their use of gold futures and options will not exceed the amounts prevailing at the date of the signature of the previous agreement.
  4. This agreement will be reviewed after five years.

              Source: ECB 

The new agreement calls for an increase of 100 tonnes of gold per year, to 500 tonnes yearly. Thus, there will be a total disposal of 2,500 gold tonnes over a five year period, effective September 27, 2004, when the current 5-year, 2,000/tonnes of gold sales agreement ends. At $400 an ounce, the total proceeds are expected to fetch just over $32 billion, if all 2,500 tonnes are indeed sold-off.

“The outcome on the Central Bank renewal is in line with expectations but will be initially construed as neutral to bullish,” says Nell Sloane of NSFutures.  “More than anything, what is important here is how the market reacts to the news and if it is sustained for more than one day. In general, speaking from a technical perspective, gold and silver are hovering right at psychological resistance levels, gold $400 an ounce and silver $7.00 an ounce. Gold is being dictated by the dollar’s strength and/or weakness while silver has been mirroring that of copper and acting more independent, as it is an industrial metal. Silver’s initial target is $7.26, from there $7.50. Gold, should we move over $405, would indicate more upside potential.”

15 central banks now compose this new agreement with the United Kingdom leaving this pact, as they have stated they do not currently wish to deal in any additional sales, with Greece replacing them. The table below lists a recent update of central bank gold holdings who are in this new agreement. Six of the ten largest central bank gold holdings are included in this agreement, with the  world’s second largest gold holder, the Deutsche Bundesbank with nearly 3.5k metric tones.

Central Bank

Gold Holdings

(tonnes)

European Central Bank

766.9

Banca d'Italia

(Italy)

2,451.8

Banco de España

(Spain)

523.4

Banco de Portugal

517.2

Bank of Greece

102.2

Banque Centrale du Luxembourg

2.3

Banque de France

3,024.8

Banque Nationale de Belgique

(Belgium)

257.8

Central Bank & Financial

 Services Authority of Ireland

5.5

De Nederlandsche Bank

(Netherlands)

800.5

Deutsche Bundesbank

(Germany)

3,439.5

Oesterreichische Nationalbank

 (Austria)

317.5

Suomen Pankki

(Finland)

49.0

Schweizerische Nationalbank

(Switzerland)

1,666.2

Sveriges Riksbank

(Sweden)

185.4

 * Official Gold Reserves Reported by the World Gold Council, December 2003

Although the agreement calls for up to 500 metric tonnes of gold per year to be sold, it looks uncertain if this goal is achievable. For instance, Germany’s central bank (Bundesbank) has stated its intentions to sell off 600 tonnes of its 3,440 tonne reserves, as part of the pact. Yet, the majority of Germany’s Bundesbank board is not in favor of such an action The Swiss have no plan to sell beyond their current 130 tonnes. The United Kingdom dropped out of the agreement and replaced by Greece who noted they have no intension to sell any gold.. The Bank of Italy has not sold any gold for over ½ a century and is not clear if they will actually sell any of their holdings.

The market is still unclear as to what exactly the new gold agreement will fetch as far as total sales. What is for sure, the European countries who signed this new, five-year deal are not going to exceed 500 metric tonnes of gold sales per year. The timing of the deal also brings a sense of stability to the marketplace, which was anticipating and speculating as to how much the new agreement could actually entail. For now, more clarrification of the exact amount of gold, up to the limits stated, will be closely monitored. 

-    Author: Peter Spina, Gold-Seeker.com

Note: The following article may be reproduced provided the article, in full, is used and mention to the author and Gold-Seeker.com is given.

Disclosure: Gold-Seeker.com has taken precautions to ensure accuracy of information provided. Information collected and presented are from what is perceived as reliable sources, but since the information source(s) are beyond Gold-Seeker.com’s control, no representation or guarantee is made that it is complete or accurate.  The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action.  The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities & therefore information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. Gold-Seeker.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through Gold Seeker. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent from Gold-Seeker.com, is strictly prohibited. In no event shall Gold-Seeker.com or its affiliates be liable to any person(s) for any decision(s) made or action(s) taken in reliance upon the information provided herein. © Gold Seeker 2004


-- Posted Tuesday, 9 March 2004 | Digg This Article




 



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