Central bank gold sales now seen as evidence of weakness, trader tells WSJ

Section:

Greece Boosts Its Gold Holdings

By Rhiannon Hoyle
The Wall Street Journal
Thursday, June 30, 2011

http://online.wsj.com/article/SB1000142405270230445060457641803049365045...

Greece's central bank increased its gold reserves marginally in May, choosing not to sell some of its vast holdings as efforts continued to trim the public debt.

The International Monetary Fund's statistics on international reserves show Greece bought 1,000 troy ounces of bullion, increasing gold reserves to 3.584 million ounces last month, according to a person who saw the data. The May figures are to be made public in the coming days.

If bought at average spot market value during May, the purchase would have cost $1.51 million.

... Dispatch continues below ...



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Greece's gold reserves remain down slightly, however, from the 3.601 million ounces held at the same time a year ago, after the central bank sold a small amount of its holdings in mid-2010.

The debt crisis in Greece and other euro-zone nations such as Portugal has led to speculation among market participants and observers over whether Europe's debt-laden countries may move to liquidate their gold holdings in order to raise cash.

Last month Germany's governing coalition budget speaker Norbert Barthle and his counterpart Carsten Schneider from the Social Democrats urged Portugal to consider selling some of its gold pile to ease debt woes.

"There has been a lot of speculation about what Greece will do with its gold, but I am very doubtful that sales will be on the table," a senior trader at a European bank said. "When I speak with central banks, they acknowledge that gold sales make people worry even more. It's like selling the family silver."

In May last year, Greece -- which holds about 78% of its total reserves in gold -- narrowly avoided default with the help of a E110 billion ($159 billion) bailout from its euro-zone partners and the International Monetary Fund. Still facing prohibitively high borrowing costs on international markets, Greece is now seeking about E100 billion in fresh aid.

However, as analysts at the Royal Bank of Scotland pointed out in a note to clients last week: "Gold is held under the auspices of the central banks and politicians are not allowed" under the constitution of the European Union "to take hold of it as this would compromise the independence of the central banks themselves."

RBS also noted that sales of gold reserves by countries like Greece would do little to help trim public debt.

"It is understandable that some observers would argue that gold is a sterile asset and could be mobilized in these very testing times," the bank's analysts, Nick Moore and Daniel Major, said. "At the same time, the scale of the debt problem is too big for gold sales to make any difference. For instance, Greece's gold holdings account for 1% of the country's government debt."

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Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit,
Extending the Mineralization of the Southwest Vein on the Property

Company Press Release, October 27, 2010

VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:

-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.

-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.

-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.

Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface.

"The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."

For the company's full press release, please visit:

http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf