Mostly: Classical

[basserdan]

Hi Mark,
Whether 'true' or not, this data should be (a) interesting and (b) taken with several grains of salt. <bg>

ECB to lift lid on gold sales today

Charlotte Mathews
04 October 2006

THE European Central Bank (ECB) will disclose later today whether the signatories to the Central Bank Agreement rushed to sell their full allocation of gold just before the deadline of September 26.

If the signatories, some of the world’s biggest holders of gold, sold considerably less than they were permitted under the agreement, it could indicate a fundamental shift in key governments’ attitudes towards gold as a store of value.

Central banks origi-nally agreed to limit yearly gold sales because of concern about the destabilising effect of uncoordinated sales and fears of substantial central bank selling on the gold price. The agreement gives some certainty to the market.

The first five-year agreement covered 1999 to 2004 and the second Central Bank Agreement runs from 2004 to 2009.

It limits signatories’ total sales of gold to 500 tons a year for a five-year period, or a total of 2 500 tons. The signatories included the ECB and the central banks of Portugal, Greece, Italy, Germany, France, Belgium and Ireland.

In past years the signatories sold close to the full allocations each year.

But latest figures from the ECB covering the year to September 22 showed total sales by central banks had reached only 398 tons.

According to Numis Securities analyst John Meyer, European central banks, particularly Germany, had decided to retain some gold reserves.

“This is an indication that banks in developed economies see a need to hold back on gold sales, perhaps to protect against economic risk or for higher price levels,” he said.

“This could be interpreted as a bullish case for gold investment either physically or through exchange-traded funds.”

The gold price had firmed $10 to $603/oz last Wednesday, the closing date for the Central Bank Agreement year, which might indicate increasing confidence that there would be no substantial selling, Meyer said.

Since then, the gold price had slipped on a weaker oil price, reflecting the current correlation between gold and oil.

http://www.businessday.co.za/articles/companies.aspx?ID=BD4A282503