Sinclair sees the big move in gold as Turk notes Fear Index''s breakout


3:19p ET Saturday, December 6, 2003

Dear Friend of GATA and Gold:

Gold's price must be gaining explosive potential again,
for a former official of the Bank for International
Settlements told a gold conference in Dubai today that
central banks may increase their gold sales.

The Reuters account of the ex-BIS official's remarks is
appended, but the important thing to remember is that
what central banks call gold "sales" may be only the
banks' acceptance of below-market-rate cash payment
for gold long ago leased to bullion banks and sold
into the market -- forgiveness of old gold loans. That
is, new central bank gold "sales" may be designed
simply to rescue the big gold shorts from a rising gold
price and to avert a short squeeze; these "sales" may
not bring any new gold to market at all.

GATA has documented how the central banks do not
have in their vaults the gold they carry on their books,
and how the International Monetary Fund encourages
central banks to misreport their gold this way. So all
central bank statements about gold have to be treated
skeptically. It increasingly has seemed best to assume
that what the banks are really doing is not quite what
they say they are doing.

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

* * *

Higher central bank gold sales likely,
former BIS gold executive says

By Ghaida Ghantous

DUBAI, Dec. 6 (Reuters) -- The Central Bank Gold Agreement
could raise total sales by 17.5 percent if it is renewed next
year, the former head of foreign exchange and gold at the
Bank of International Settlements said on Saturday.

Since 1999, Giacomo Panizzutti had been in charge of the
secretariat responsible for supervising the five-year agreement
that limits total sales by 15 European central banks to 2,000
tonnes, or 400 tonnes annually. It runs out in September 2004.

"I strongly believe the agreement will be extended, probably
for a slightly larger amount of around 2,300 to 2,400 tonnes,
and for another five years," Panizzutti, who retired last year
after a 34-year career, told a gold conference in Dubai.

"Such an increase of about 300 to 400 tonnes should not be
a problem and should be easily absorbed as long as the
market remains as well supported as it is just now," he said.

"I would not be surprised if they were to abandon the
restriction on gold lending," he added.

The market has been eyeing three major holders of world
gold reserves -- Germany, Italy and France -- as potential
big sellers in any new agreement. Germany has indicated
several times it would like to sell gold next time round while
France and Italy have so far remained silent.

"My view is France would welcome a reduction in their gold
reserves, which stand at 54 percent," Panizzutti said.

He said he would not be surprised if Switzerland decided to
sell 350 to 400 tonnes between 2005 and 2009 and that
Spain could easily dispose of 200 to 250 tonnes.

Panizzutti said he did not think Britain, Italy, or Sweden
would make further sales and that if Sweden were to enter
the list of sellers it would probably be a small amount.

By September 2004, he said, the official gold holdings of
the 15 signatories would amount to around 14,000 tonnes
-- about half the gold owned by the official sector worldwide.
He said Greece was expected to be added to the new

"I think the amount of gold central banks are holding is
very large and more reductions make sense as long as it
is a gradual increase and not a very large decrease," he
said. "Maybe this is the right time to take a longer-term

Ursula Oser, vice president head credit and fixed-income
research at Credit Suisse, told the conference the positive
trend in gold prices would continue in the short and long
term because U.S. dollar weakness was likely to persist
and there was no real inflationary threat in the first half of

She also said that there were Asian currency diversification
efforts into euro and gold.

Gold prices closed at near-eight-year highs of $407.30 an
ounce on Friday after the U.S. dollar fell to a new low
against the euro and made bullion cheaper for overseas

The $400-per-ounce level, seen as a psychological barrier
just weeks ago, has become a rock-solid level of support.

"I think $411 is another important resistance. It might be
broken soon," Oser said. "We are cautiously optimistic
on gold prices. I think there are several factors supporting
gold but don't expect an upward trend to develop without


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