two sides to the same coin

As this is written it is three days AFTER the Bank of England's (BOE) Bullion Blunder - and London suspiciously feels it must DEFEND its actions. Seems to me if they originally felt justified in their reckless action, there would be no need for defense today. Consequently, it is evident the BOE feels the heat of negative public opinion and growing dissention in Parliament against its cavalier treatment of HM's gold. Therefore, let's carefully scrutinize today's defensive commentary (my rebuttal will appear in parenthesis and in red).

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(YAHOO) Friday July 9, 2:20 pm Eastern Time

ANALYSIS-UK gold sale is no policy aberration

LONDON, July 9 (Reuters) - Britain's plan to sell more than half its gold reserves is no policy aberration but the product of sound finance, and withering criticism may only make things worse for gold prices, economists and analysts said on Friday.

(Talk about "sound finance" is unmitigated rubbish! They only proffered the half-baked excuse and well-worn cliché that gold earns no interest. Mention of "withering criticism" is a feeble attempt to shut-up those critical of the bungled operation. And mention of "economists and analysts said…" is a shameless prevarication which is difficult to disprove - as I can similarly say there is "a legion of prominent economists and analysts who totally disapprove of the Bullion Blunder! They just made up that fairytale as a unsubstantiated supporting argument)

Changing central bank policies worldwide reflect pressures to generate returns from national reserves, favouring foreign-currency holdings over low-yielding gold, they said.

(This is nonsense as the central banks have in recent years been engaging in the very dangerous practice of gold "leasing" - which pays them interest. Whereas US dollar dominated T-Bonds indeed pay interest, they have lost about 15% of their market value in the last eight months due to the rise in interest rates. And forget the Euro which has plunged 13% YTD. Literally, the BOE has NO FINANCIALLY SOUND alternative which generates real returns)

``I would say this is a natural progression in central bank policy,'' said Roger Alford, senior research associate in the financial markets group at the London School of Economics.

``This represents the growing influence of economists in the Bank of England and indeed at the International Monetary Fund and elsewhere. They tend to look at the rates of return on assets and to ask whether asset allocation is right or not.''

(Ditto of the last rebuttal)

Gold's fall to fresh 20-year lows this week, after Britain held its first 25-tonne auction, showed its fallibility as a reserve asset. The Bank of England plans to sell 415 tonnes over the next couple of years and put the money into dollars, euros and yen.

("Fallibility" my fanny! It was precisely the BOE's Bullion Blundering sale which put the kibosh on the gold market. And putting the money into US$, euros and yen is abominably absurd, bordering on the ridiculous. US$ T-Bonds are going to hell in a hand-basket, the euro has devalued 13% YTD and Yen bonds "boast" near ZERO yield. What are those guys talking about! Evidently, there is a rectal-cranial inversion here)

Forrest Capie, professor of economic history at London's City University Business School, said taxpayers had been short-changed by central banks with high gold weightings in reserves.

(Now the braying of this Professor is monumental. Due to the BOE's Bullion Blunder, UK taxpayers have lost nearly $1 Billion US in the value of HM's remaining gold - or does the "illustrious Professor not take into account "paper" loses of the gold?!)

``You only have to look at the price trend over the last 20 years to see that taxpayers can legitimately ask: 'Is this the best you can do?' It's very difficult to defend holding gold on the scale at which it has been held,'' he said.

(If Central Banks quit "leasing gold, and gold producers cease selling forward, supply/demand dynamics will reassert gold's value)

Evidence that central bankers are taking greater interest in the worth of their gold includes their tendency in recent years to account for it at or near market prices, rather than leave it at an artificially low book value.

(This comment demonstrates such lame stupidity, I will not dignify it with an answer)

He said Britain's gold sale and the more than 10 percent fall in prices since its plan became public in May had made gold policy a pressing issue among the 11 countries in Europe's single currency bloc, which together hold 12,574 tonnes of gold.

(Frankly, this observation makes no sense whatsoever - pure babbling)

Anti-sales protests by gold miners and producer countries such as South Africa, which faces devastating job losses and economic hardship if low prices force shaft closures, could perversely do more harm than good.

(Now this comment really infuriates me. This was the same type of discriminatory comments made by the chauvinistic bigots who were against female suffrage or the intolerant rednecks who tried to stall black freedom in the US. No intelligent person buys that crap!)

One London analyst, who asked not to be named, pointed to the danger of preventing the International Monetary Fund's planned sale of up to 311 tonnes from its holdings of 3,217 tonnes.

(Likewise, I say a world-acclaimed monetary expert emphatically stated the IMF has caused civil strife, social disorder and ruined many an economy by its mindless actions - and should have been abolished 10 years ago. Likewise, he asked not to be named (smile thingy)

The IMF proposal, intended to help fund debt relief for poor countries, has been attacked by U.S. Congressmen who have threatened to block it.

(It has been abundantly documented the so-called "relief" amounts to 78 cents per $1,000 debt principal - gimmie a damn break, eh!)

``If the IMF sale does not go ahead with the sales it will probably be the worst day in gold's history,'' the analyst said.

(Too stupid to dignify with an answer!)

``If they can't use it they will give it back to members, and what will all those countries do with it?'' he asked. Fund members included countries which had sold substantial amounts of reserve gold in the past, and which would probably do so again.

(Ditto, too stupid to dignify with an answer!)

This article leads me to believe that the leading 'string-puller' of GoldGate resides in LONDON, and not Washington - as I previously suspected.

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11 July 1999