Barrick may give Blanchard a second chance to compel production of evidence


8:53p PT Tuesday, January 28, 2003

Dear Friend of GATA and Gold:

Here's the best gold story of the month. What's
the difference between China's central bank and
the central banks of the West? China's central
bank is quite open about its intervention in the
gold market to suppress the price.

Here it is, in black and white below.

Is there really anyone left who seriously argues
that this kind of thing doesn't happen? Is there
really anyone left who does not believe that gold
demand is now much greater than supply?

But is there anyone in the financial press who
can grasp the significance of this and make it
plain to the public?

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

China's central bank intervenes
to rein in gold prices


SHANGHAI, Jan 28 (Reuters) -- China's central bank, seen
intervening recently in Shanghai's gold exchange to curb
sky-high prices, is expected to allow trade to return to
normal after the Lunar New Year holiday next month,
traders said on Tuesday.

Domestic gold prices rose to such dizzying heights that
the central People's Bank of China sold some of its precious
metal to cool prices, which had risen above world levels
due to a demand spike before the important annual
holiday, they said.

But demand for gold should slacken after the February
1-7 holiday and prices would stabilise, traders said.

The central bank attempted to rein in prices to help
domestic gold processors curb rising production costs
and prevent firms from importing gold illegally to cash in
on spreads between domestic and global prices, they said.

"The central bank is unlikely to intervene if everything goes
back to normal after the New Year," said a floor trader.
"The government will still want to let the market determine

The central bank sold nearly 600 kg of gold just before the
market closed last Wednesday, pushing prices down by more
than one yuan to around 96 yuan ($11.6) per gramme,
although prices and volumes still closed at record highs.

"The central bank intervened several times in the past few
weeks because prices went too high," said a second floor trader.

Domestic gold prices have hit new highs repeatedly over the
past week, surpassing world prices and hitting six-year highs
this week at $372.60 an ounce as worries of a possible war
in Iraq intensified.

But Shanghai's gold prices have eased, with prices of 99.95
percent gold falling to 97.20 yuan per gramme on Tuesday,
down from a record 98.26 yuan on Monday as domestic
demand began to taper off.

Shanghai's average price on Tuesday was equivalent to
$365.20, lower than global spot prices (XAU=) of $368.00/8.50
in Asian trade as many processors had already bought enough
gold to produce ornaments and jewellery for the New Year

Some traders said the central bank used gold from its
reserves to intervene. At the end of 2002, China's gold
reserves were 19.29 million ounces (546.9 million grammes),
up from 16.08 million ounces at the end of November.

"The central bank has the right to intervene," an exchange
official said, declining further comment.

Traders said the central bank, the sole intermediary
between gold buyers and sellers until the exchange opened
in October, has maintained some control in hopes of
keeping end-products affordable for consumers by controlling
raw material prices.

"If domestic prices rise way above global markets, the
government is afraid that some companies might import
illegally and refine it to standard gold to sell domestically,"
the second trader said.

Gold smuggling is common in the country, especially in
the south, as China's annual gold demand of 250-300
tonnes (8.8-10.6 million ounces) well exceeds the
estimated 190 tonnes it was expected to produce last
year, officials said last year. ($1=8.276 Yuan)


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