Where, The Mining Web asks, is gold''s Patton?


From the Financial Times
August 31, 2001

BIS banker speaks on gold:
Giacomo Panizzutti's estimates of central bank
gold lending implicitly contradict conspiracy theories


The question of how much gold has been lent out by
central banks -- an emotionally charged topic in some
circles -- has received its most authoritative answer
so far.

Giacomo Panizzutti, head of foreign exchange and gold
at the Bank for International Settlements -- the
"central bankers' central bank" -- said this week he
estimated that 5,200 tonnes has been lent to the

This number, which includes 500 tonnes of lending from
private stockpiles, confirms estimates already made by
mainstream gold analysts.

And although the BIS official did not explicitly say
as much, the estimate contradicts conspiracy theories
that the official sector has undermined the gold price
by pumping more than twice that amount into the

The interview with Mr. Panizzutti, speaking in his
private capacity rather than on behalf of the bank,
was published in the London Bullion Market
Association's quarterly, The Alchemist, yesterday.

This is the first time a highly placed gold official
has explicitly put a number on gold lending.

His comments come at a time when the 15 European
central banks who signed the 1999 Washington Agreement
on gold are under mounting pressure to publicise their
lending levels, and some analysts think the interview
might have been an unobtrusive way of doing this.

Mr. Panizzutti said he believed the Washington 15 had
lent 2,119.32 tonnes, which is the amount they had
lent at the time of the agreement and a total they
pledged not to exceed.

These nations hold 15,316 tonnes of a total 32,500
tonnes held by the official sector. A further 12,118
tonnes are held by the United States, the International
Monetary Fund, and Japan, whose policy is neither to
sell nor lend gold.

This leaves 5,066 tonnes of official reserves held
elsewhere. Mr. Panizzutti argues that even if half of
this had been placed in the market, official lending
would not be far from 4,700 tonnes of gold.

Analysts find the timing of Mr. Panizzutti's comments
interesting in light of an impending ruling by a
Boston court.

A group of gold enthusiasts called the Gold Anti-Trust
Action Committee (GATA) believes that at least part
of gold's price weakness can be attributed to a
conspiracy between the BIS, top officials at the U.S.
Treasury Department, the Federal Reserve Bank, and
investment houses.

In December 2000 GATA backed a lawsuit filed in
Boston accusing the BIS and its alleged
co-conspirators of co-ordinating "the sale and leasing
of gold and the sale of gold derivatives to keep the
price of gold low and thereby disguise inflation
weakness in the U.S. dollar, as well as prevent losses
on gold short positions held by certain banks."

The case is now at a critical stage as the Boston
district court prepares its ruling on whether the
lawsuit goes to discovery or is thrown out.

BIS directors will no doubt be watching with interest
to see whether the judge takes Mr. Panizzutti's
comments to heart.