To:long-gone who wrote (179) From: John Barendrecht Thursday, Jul 3, 1997 11:27 AM Respond to of 79916
RTRS-RBA says sold 167 tonnes of gold in six mths SYDNEY, July 4 (Reuter) - The Reserve Bank of Australia (RBA) sold 167 tonnes of gold over the past six months following a review of its international reserves but had no plans for further sales, the bank said on Friday.
The sales reduced the RBA's gold holdings to 80 tonnes from 247 tonnes, and were undertaken forward, it said in a statement.
The first 125 tonnes were delivered in June, and the remainder woulds be delivered in August and September.
``The sales were made gradually, taking care not to disrupt market conditions,'' the RBA said.
On a Reuters calculation, the sales will reduce the RBA's gold holdings to 2.57 million Troy ounces from 7.94 million.
``The new level (of holdings) is consistent with Australia's longer-term requirements, and the Bank has no plans for further sales,'' the RBA said.
The sales delivered in June will be reflected in next Monday's Official Reserve Assets press release, it said.
The RBA said the sale proceeds were immediately invested in government securities denominated in U.S. dollars, Japanese yen and German marks, and so had not resulted in a reduction in international reserves.
``While the value of gold holdings fell by A$1,830 million over the month of June, the value of foreign exchange rose by A$2,368 million, which reflects the proceeds of the gold sales, together with other factors such as valuation changes,'' it said.
The most recent reserves data show the RBA's gold holdings were valued at A$3.587 billion at end-May and its foreign exchange reserves at A$18.06 billion.
The RBA said a number of other central banks had sold gold from their reserves over the last five years, the most prominent being those of Austria, Belgium, Canada, the Netherlands, Portugal and South Africa.
The decision to sell Australia's gold followed a review by the RBA of holding the costs and benefits of holding a significant proportion of its international reserves in gold.
After the review the RBA board concluded, while there was a need to hold gold as a contingency measure, the previous level of holdings of about 20 percent of reserves was not justified.
``The principal reason for this conclusion was that a country in Australia's position, with large gold reserves in the ground and high annual production, derives negligible diversification benefits from holding a significant proportion of its international reserves in the form of gold,'' the RBA said.
Australia produces nearly 300 tonnes of gold a year.
The RBA said the following standard accounting practice, it had regularly revalued its gold to reflect market prices.
This had resulted in large unrealised gains held in a revaluation reserve on its balance sheet, as the gold was bought at the old ``official'' price of US$35 per ounce.
``This sale realises this capital gain,'' the RBA said, adding Treasurer Peter Costello had given approval for the RBA to retain these funds for re-investment in other assets to avoid any rundown in international reserves.
``The government will, of course, receive an on-going benefit from the additional profit the Bank will generate from the investment of these funds,'' the RBA said.
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