- Dear Friend of GATA and Gold -
-
- Metal Bulletin's story appended here is strong evidence
that Western central banks are having trouble mobilizing enough real gold
with which to maintain their gold-price suppression scheme.
-
- The story's reference to GATA's being "believed"
to have made a freedom-of-information request in regard to the long-unaudited
United States gold reserves is easily clarified: The request is still being
devised by GATA's consultant, constitutional scholar and lawyer Edwin Vieira,
with the hope of making it un-dodgeable by the Treasury Department. GATA
hopes to submit the request in the next month.
-
- Chris Powell , Secretary/Treasurer
- Gold Anti-Trust Action Committee Inc.
-
- Why Bank Of England's Gold Has Lost Its Shine
-
- By Carmelle Lawlor
- Metal Bulletin, London
- www1.metalbulletin.com
- 9-19-7
-
- The Bank of England has revealed that it is in talks
with the London Bullion Market Association following concerns over the
quality of its stocks of gold.
-
- The bank keeps around 300 tonnes of the yellow metal
on behalf of the UK Treasury -- before Gordon Brown initiated his controversial
sales programme in 1998 the tally was 700 tonnes -- but it has emerged
that not all of this remaining metal is fit for delivery.
-
- The bank declined to reveal how much of its stock might
be affected but in response to a request filed by Metal Bulletin under
the Freedom of Information Act the bank conceded that there could be a
problem without disclosing specific details.
-
- "The bank is currently engaged in productive discussions
with the LBMA about this matter," Stuart Allen, deputy secretary
of the bank, said in the e-mailed response. "Once that uncertainty
has been resolved (hopefully in the near future) we should be able to
brief you on the outcome."
-
- With gold at 16-month highs above $700 per ounce and
concerns that central banks in Europe -- most recently Spain's -- will
trim their sales, the Bank of England's admission could spur gold higher
at a time of economic uncertainty.
-
- "The implications would be much wider than just
the UK," a London precious metals analyst said. "What would be
interesting would be the implications it would have for other countries
that hold much more."
-
- Under the LMBA's "London good delivery" standards,
gold bars that have been held in storage for many years may no longer
conform to the standards set by the association.
-
- "There is some uncertainty about the status of LGD
standards in respect of certain categories of gold bars that have been
held in deep storage for many years," he wrote
-
- "While it is possible that a number of bars held
[on behalf of the Treasury] might fall into that category, I am sure that
you will appreciate that until discussions with the LBMA about LGD standards
have been concluded, it is not possible for us to provide further details,"
Allen said.
-
- The bank would not say what tonnage falls into this category
but did concede it holds gold in a number of different formats.
-
- "I can confirm that gold is mostly held in the form
of gold bars, but there are also some ingots and coins held," Allen
said.
-
- "None of the gold held by the bank on behalf of
the Exchange Equalisation Account [the Treasury's gold] has assay certificates,"
he said.
-
- Rumours have long circulated the bank's stocks might
not be deliverable and hence might be worth less than official estimates.
-
- This could be politically embarrassing for Prime Minister
Brown, who already is held in low regard among many in the gold industry.
-
- While chancellor he sold some 400 tonnes of gold at prices
less than half today's rate, potentially costing the Treasury hundreds
of millions of pounds.
-
- Gold held in bar form contains cracks and fissures, suggesting
that it is not pure gold, according to market observers. Some of the gold
stored in coin form contains large amounts of base metals and would need
to be melted down in order to be deliverable, they told Metal Bulletin.
-
- "I would expect the bars to conform to LBMA standards,
but if there are coins, then that is different. The LBMA doesn't deal
with coins, and coins do contain a certain amount of base metals,"
said Societe Generale analyst Stephen Briggs.
-
- When the gold was acquired, current methods of assessing
quality did not exist and the gold would have been judged by weight, observers
said.
-
- "The gold has been acquired over the decades since
around 1840. There weren't the same gold delivery standards in those days
as there are today. If it weighed OK, it was accepted," said one
analyst.
-
- US gold sources said that they had similar doubts about
their country's gold, which they say has not been examined by an external
auditor since the 1950s. The Gold Anti-Trust Committee (GATA) is believed
to have filed its own freedom-of-information request for more details
but has yet to receive a response.
-
- James Turk, a GATA member and founder and director of
GoldMoney, a US internet-based gold investment company, expressed no surprise
that the Bank of England's gold may be of poor quality.
-
- "The gold shipped from the US in the 1960s and 1970s
was coin-melt gold, which is 91 percent pure. (Coins contain base metal
to harden the coin to help prevent wear and tear to the gold.) This gold
is less than the acceptable standard of the London Bullion Market Association
of 99.9 percent pure," Turk said in an e-mailed statement.
-
- Still, analysts argued that though it may seem surprising
that the gold does not conform to today's standards, the problem could
be easily rectified.
-
- "I would guess that it would be only a small proportion
that doesn't conform to LBMA standards, and it would be an issue only if
they needed to sell the gold," GFMS analyst Peter Ryan said. "Some
of this gold was acquired 30 or 40 years ago and standards do vary, but
it is not difficult to fix."
-
- * * *
-
- Join GATA at these conferences:
-
- The Silver Summit
- Thursday-Friday, September 20-21, 2007
- Coeur d'Alene, Idaho
- http://thesilversummit.com
-
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- Sunday-Thursday, October 21-25, 2007
- New Orleans, Louisiana
- http://www.neworleansconference.com
-
- * * *
-
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-
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