Apr 17, 2007

Fears grow that Britain has lost control of its remaining gold

By Ambrose Evans-Pritchard
The Telegraph, London
Tuesday, April 17, 2007

As Gordon Brown prepares for a grilling in the Commons over his fire-sale auction of Britain's gold at the bottom of the market, concern is mounting that the Treasury may have lost control over the small amount still left in its vaults.

Peter Hambro, head of Britain's largest pure gold mining company, said he believed the Bank of England may have leased out its bullion to earn extra yield.

"The real risk is that the Treasury has lent out the remainder of the gold. It is very important to know whether the bank's gold lending is on a secured basis," he said. The concern is that counter-parties could default in a crisis such as the LTCM-Ashanti affair in 1998.

"The whole point of gold is that it's not somebody else's paper currency. It's the stuff that keeps you alive when everything else goes wrong," he said.

Central banks around the world have routinely lent out gold over the years to bullion banks such as Goldman Sachs and JP Morgan. The IMF last year questioned if they had lent out more gold than publicly revealed, a situation that would leave the market a large overhang of "short" positions. The Treasury said last night that it would look into any possible gold loans.

With gold now trading at $690 an ounce, Mr Brown's decision to break ranks with the US, Japan, France, and Germany by selling off 395 tonnes of gold has cost taxpayers more than Β£2 billion.

In a move that astonished dealers, Mr Brown insisted on selling the gold in open auctions. The first sale drove the price down to $254, the low-point of an 18-year slide. There were 17 auctions between July 1999 and March 2002 yielding an average of $274.9 an ounce.

Ross Norman, director of TheBullionDesk.com, said the reason for the sales was to support the fledgling euro. The proceeds were switched into 40pc euros, 40pc dollars, and 20pc yen. "His motives were political, but it was carried out in an incredibly foolish way, just as the market was turning up."

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7 ΣΧΟΛΙΑ (COMMENTS):

Anonymous Concerned ΕΙΠΕ (SAID)...

Megale,

Prosexe ths simvoules pou dineis. Sto exw ksana pei sto blog sou.

Kai egw agapo to xruso kai eimai megalos ipostirixths tou.

Alla mhn perimeneis me tipota oi Amerikanoi/Europeoi klp na mhn ipostiriksoun to nomizma tous.

Get ready for Deflation. O Bernanke den exei ta @@ na kanei inflate to USD oste na ginei axristo......kai oxi mono auto, DEN MPOREI na to kanei !! Pws akrivos tha to kanei auto ean stamatisoun oi Amerikanoi na danizoun ?

Deflation is what is coming....in all asset classes. Housing first, then gold and commodities.

April 18, 2007 12:00 PM  
Blogger Chrysotheras ΕΙΠΕ (SAID)...

Hi,
please read next post taken from Richard Russell's newsletter and check out his opinion on Bernanke's moves re. deflation.

Oh, BTW, have you seen the projected M3 stats lately?

Take care and keep bying the metal on corrections!

April 18, 2007 1:14 PM  
Anonymous concerned ΕΙΠΕ (SAID)...

To eixa diavash, kai to comment mou htan gia auto to post, alla ekana lathos kai to evala se lathos post.

Anyway. Swstos to M3 den to dimosievoune. Alla so what ksereis esei th einai to M3 ?

Egw aplos rotao. Pos akrivos tha kanoun increase to money supply apo thn stigmh pou den tha danizonde pia oi anthropoi ? Ta epitokia mporoun na ta pane sto 0% alla to idio tous kanei (Japan in the 90's).

Kai ksana lew....Ben is bluffing. Den prokeite na katastrepsh to Amerikaniko dollario.....no way. Auto pou les einai speculative.....

Kai palh prosexe kala ths simvoules pou dineis. To xruso den prepei na liph apo kanenous portfolio....alla to polh 5% ths perousias sou prepei na einai ekei.

Den einai h wra tou xrusou akoma.....it is coming, but not now. The money that's buying gold now is purely speculative. Einai oi idioi pou agorazane spitia prhn merika xronia........have you noticed the correlation between gold and housing the passed few years ? Tixeo einai ?

Cash up.......

April 19, 2007 7:15 AM  
Anonymous Anonymous ΕΙΠΕ (SAID)...

Agaphte concerned,
You obviously belong to the Prechterite camp.
You could be right or wrong.
Nobody knows the future.
What I know and feel is that one is a lot safer holding 50% (not 5%) of liquid assets in gold. And mainly the real physical stuf.
It may fall in a deflationary event, but in relative terms it will buy more than other mediums of exchange.
In case of hyperinflation,.......
guess what?

April 19, 2007 10:10 PM  
Blogger Chrysotheras ΕΙΠΕ (SAID)...

I absolutely agree with Mr Anonymous.
Moreover, I think Ben (the FED) has passed way beyond the bluffing point.
America's total debt has climbed to $44.5 trillion, or 331% of GDP. Inflating the US$ out of debt is the only way out.
Ergo: the US$ is a "accident waiting to happen" (a "dead duck" as Peter Grandich describes it) since most of it is held by foreign hands (China, Russia, Middle East, etc) and is being "quietly" exchanged for other FX -including gold. Quietly that is, until the proverbial "kid" calls out the bluff: "The King is Naked!"....and then all will rush to the exits....
...got gold?

April 19, 2007 11:47 PM  
Anonymous concerned ΕΙΠΕ (SAID)...

Okay then,

I have read Prechter, and think he has some valid points.....same as Mish (Mike Shedlock)

I will ask you again.....how will Ben 'inflate his way out' exactly ?

I still don't buy it. Have you seen real wages increasing ? What does this tell you about the real money supply ?

This has been a credit expansion and it has lined the pockets of the very few (builders, plumbers etc...)

What you are prophecizing is exactly the same as what the peak oil pundits are saying. Instead they talk about oil and you about money.

As I have said before.....I love gold....have a good stash myself, but when push comes to shove, and money becomes tight......expect a lot of gold sovereigns to be pawned in......and expect people's priority to shift from buying jewlery, to paying off their debts.

Don't be to sure about your opinions, and for goodness sake, don't be so one sided about where gold is going or not. This site reminds me of the real-estate spruikers who were saying that Athens is the next Manhattan and that we should buy apartments for 300,000 euro's. But in this case it is gold-spruikers. Give a couple of views.

Let me ask you another question. If the price of gold is to go to 2-3000$ per ounce.........what would the price of let's say olive oil go to in that case ?

Cash up......some gold too.....but not much (If Hyperinflation were to hit, then 'me 100 lires tha eisai plousios').

April 21, 2007 5:34 PM  
Anonymous concerned ΕΙΠΕ (SAID)...

you don't have any answers to the questions I posed above......

April 24, 2007 10:48 AM  

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