Mostly: Classical

[lvlamb]

re: Washington Agreement. Har....aaaargh!
I will write a paper on this as the discussion will keep resurfacing till next year.

A (very brief) history.
The Joint Statement on Gold (aka the Washington Agreement) was initiated by 3 European countries holding large reserves: France, Italy and Germany.
The agreement gained support among other CB's of the European Union plus Zwitserland.

The England CB was invited to sign that agreement the very morning of the announcement. (UK is more British and allied of the US than European, the signatories did not want te agrement to be torpedoed but the US central bank <ng>).

The Swiss Central bank had a more serious problem: by law, sdince 1971 the Swiss Franc was set at CHF 142.9/troy oz. On 1 May 2000 a constitutional amendment removed the mendatory link to the weight of gold.

At that time, the Swiss CB then had an excess reserve of 1300 Tons of gold, which made the majority of the Washington Agreement.

The Bank of England planned sales were included, and also some other planned sales.

The 400 Tons /year for a total sales of 2000 Tons were made in majority of 2 special situations: an amendment to the Swiss constitution, and the (foolish) sale of the Bank of England. The remaining sales are pure adjustements.

First quick conclusions:
- Swissie ain't ole Swissie anymore: since May 2000, the excessive coverage (CHF 142.9/oz.) cease existing. Any study comparing the Swissie to the POG is irrelevant for the data after May 2000).
- The Bank of England has to BUY BACK (120 to 160?) Tons of gold if UK is ever to join the Euro: the entry ticket is 15% of monetary mass transferred in gold to the ECB. This is why is called it foolish some sentences ago.
- New candidate Central Banks also have to buy some yellah if they are to join the Euro.
- Sales of gold in order to cover one country's deficit is explicitely prohibited by several European treaties.
- The Central Bank of Greece recently sold a pack (12.5 Tons?) before signing into a renewed agreement. You never are too early. <g>
- The IMF has NOTHING to do with the WA, not part of it. Never been the initiator, in fact, the WA is a pain in their a$$.

Where do I want to lead?
Speculation 1: 400 Tons sales per year was a special situation. A renegociated agrement could be for far less, say 20 to 50 Tons/year.
Speculation 2: UK will never join the Euro.
Speculation 3: Central Bankers have been know to buy high and sell low. (Proven with the Swiss CB and England CB sales). The risk for the Euro is more ECB sales (as the gold reserve are 15% of total reserves in gold, higher POS can lead to CB sales, lower POG to a loss of confidence as I don't believe the ECB would buy gold back).
Speculation 4: Other CBs, not signatories of the WA might sign the next version.
Speculation 5: The US will be a signatory of such an agrement when the Dollar devaluation will have run it's course. (aka suppression of the 46% debt held by foreign nations). Better said, there will not sign as they will initiate a new financial system.
Speculation 6: the US Dollar will be at the bottom before the next joint statement on gold will expire.
I could speculate till the end of the woild ! LOL.

Remains that, I consider articles calling for an increase of gold sales, or historic comparison to the Swissie as rubbish and unfounded noise.