Gold - The Weekly Global Perspective

By: Julian D. W. Phillips | Sat, Apr 2, 2005
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HIGHLIGHTS from "Global Watch - The Gold Forecaster"
Market Action / Short-term forecasts across the Board!
Oil set to Take Off! - Growth - Inflation - the foreign value of the $
I.M.F. recommendations. New Sellers in the Official market - France
now selling again!
New Indian Gold Policy / Saudi Arabia drops duties and hits 200 tonnes!
Summary: The present Gold Price Drivers.
Technical Analysis of the Gold Price: Long/Short term.
International Gold Markets.
Silver / Platinum
SHARES analyzed -INDEX - CRB, HUI, NEM, AEM, PDG, HMY, NG, VGZ, GSS, SSRI

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New sellers enter the 'Official' Gold market. France is selling!
The European Central Bank issued this statement on Thursday, "The European Central Bank (ECB) has completed a programme of gold sales amounting to 47 tons of gold. These sales are in full conformity with the Central Banks' Gold Agreement, dated 27 September 2004, of which the ECB is a signatory. It is not the ECB's intention to sell more gold for the first year of the agreement, starting on 27 September 2004 and ending on 26 September 2005." 44.1 tonnes of these sales took place between February 1st March 11th this year.

France sold 8.1 tonnes of gold in December and 7.5 tonnes in January. It appears that they were tardy in the reporting of this sale, which is why we were given the impression they had stopped selling gold altogether.

Switzerland is winding up its selling programme of 1300 tonnes of gold conducted through the "Washington" as well as the "Central Bank" Gold Agreement.

What is becoming clear, with hindsight, is that the Central Banks do not wish to give any warning of gold sales, hence the 'after-the-event' announcements pattern set amongst them. Whilst this destroys transparency, it certainly protects the price and makes it clear that apart from the pattern of their sales, they do not want to exert downward presure on the gold price. But it is clear that they are selling when they think the market is on the rise.

The pattern of selling now makes clear a statement we made last year that the European Central Bank Gold Agreement signatories will try to manage the gold price at best. We have absolutely no doubt now that these Central Banks are attempting to manage the gold price. They are acting to stop it from becoming toppy and volatile. This is not purely a gold price suppression, or they would announce their sales ahead of the event, but it does give gold a stability that Central Banks need to be able to use it as a credible reserve asset.

As a result of this new information and the clearer picture we now have, we will be sending out a new article, correcting our previous position as well as analysing these and other develpments on the "Official Sales" front in our next issue of "Gold - Authentic Money". [We will send this FREE to Subscribers and new Subscribers only of "Global Watch - the Gold Forecaster". To subscribe to either publication - see below]

The I.M.F. comes out with the recommendations it was asked for.
The I.M.F. was asked to look at ways to raise money with which to write of Third World Debt. It has done so. Asked to look at potential gold sales it has said the International Monetary Fund believes the best way to provide more debt relief for the world's poorest countries is for rich countries to come up with new resources to pay for up to 100% relief on the sums owed to the IMF and World Bank. Please note that gold sales were not on top of the list of options.

Given the political difficulties in coming up with those funds, the IMF says the next best alternative might be carefully planned sales of a small portion of the I.M.F.'s gold. The I.M.F.'s analysis shows that selling a small portion of the fund's gold to pay for the I.M.F.'s share of debt relief need not cause disruption to the market, if the sale is well managed.

And at the board's discussion, on Wednesday, the US director made clear that the Bush administration did not favour gold sales. Few observers see any agreement as likely, at the spring meetings of the fund and the bank in two weeks' time.

We hope and expect to see this meeting in two weeks time close the book on potential I.M.F. sales of gold. This will remove the uncertainty the gold market has been undergoing since this proposal was put forward, despite the overwhelming number of issues militating against such sales.

New Indian Gold Policy!
The Indian government is shortly to announce a new gold policy. This policy aims to permit hedging in gold to be undertaken by the banks as well as to permit Mutual funds to invest in gold. Banks have not been as successful as they would have liked in the gold industry, clearly because they come with transparency [vital for taxability], accounting for all transactions, as well as take control of people's gold, on top of which they add charges to dealing in gold that the average Indian just does not like. Witness the recent strike over a 2% Excise Tax! Clearly then these moves are aimed at the wealthy top section of the market [perhaps 10% of the gold market there]. The Association of Chambers of Commerce want measures included in this policy that improve the ability of banks to implement Gold-linked Saving scheme.

- Global Gold Hub!
Assocham is asking the government to aid in the development of India as a global hub for the bullion trade. In this regard and of chief concern to the gold market in India is the broadening of the base of the list of canalised bullion importers. They feel that the limiting of the number of Importers of gold and silver through select canalised agents is an outdated policy, which led to added transaction costs and complexities, as well as a monopolistic situation in the hands of these selected agents. The simplification of these procedures would enhance the gold market efficiency enormously.

The Chamber has also demanded the establishment of Free Trade Zones (FTZs) to develop international bullion markets in India. It has proposed that the suggested FTZs should be set up with involvement of Reserve Bank of India, banks, refiners, fabricators, importers and exporters of bullion and should be kept outside the taxation net of sales tax and import duty. To further develop India as a global gold manufacturer it also advocated the removal of restrictions on overseas investments in gold and silver mining to encourage international investments from mining companies. With the present gold business in India being so huge, there are few reasons why India should not grow to be a prime global gold hub for manufacturing in particular. With the present gold industry momentum, such a development would be an extension of the present industry requiring little in the way of new development!

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We are about to publish a report on "Zimbabwe - Capital Controls Take it all!" As this was a difficult set of information to source accurately and provides a look at the tyrannical extent to which Capital Controls can go we will send this FREE to Subscribers and new Subscribers only. [To subscribe. Please go to www.goldforecaster.com]. It is the third article on a series on Capital Controls.]

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Julian  D. W. Phillips

Author: Julian D. W. Phillips

Julian D. W. Phillips
Gold Forecaster

Julian D. W. Phillips

"Global Watch: The Gold Forecaster" covers the global gold market. It specializes in Central Bank Sales and details, the Indian Bullion market [supported by a leading Indian Bullion professional], the South African markets [+ Gold shares shares] plus the currencies of gold producers [ Euro, U.S. $, Yen, C$, A$, and the South African Rand]. Its aim is to synthesise all the influential gold price factors across the globe, so as to truly understand the global reasons behind the gold price.
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