Barclays plans bullion fund to compete with World Gold Council''s

Section:

4:32p ET Saturday, February 7, 2004

Dear Friend of GATA and Gold:

Appended are the latest stories about the meeting of the
Western finance ministers in Boca Raton, Fla., the most
timely being CBSMarketWatch's, which is placed first and
which reports that the ministers have agreed on a statement
that will be released this evening.

See what you think, but the comments below seem to suggest
that no particular co-ordinated policy will emerge from the
meeting and that those countries that have been distressed
by debasement of the U.S. dollar and Asian currencies will
be invited implicitly to debase their own -- that is, in
particular, the euro.

Gold market experts like GATA consultant James Turk
of GoldMoney and The Freemarket Gold & Money Report
have been saying that the gold rally will REALLY begin
as gold rises in ALL currencies, not just the U.S. dollar.
If more "foreign-exchange flexibility," supposedly to be
the G-7 conference's resolution, means a better gold
price in euros, gold bugs may not complain.

In any case, people who reject the possibility of
manipulation of the gold price by central bankers might
ask themselves why central bankers would gather in
Florida and complain about exchange rates in the
first place if they weren't trying to subvert free
markets.

The massive government interventions in the dollar-yen
and dollar-yuan markets are public record, acknowledged
even by the central bankers themselves in the news
stories below. If gold is a currency as well as a
commodity, wouldn't it also unavoidably figure in
currency interventions? The secrecy and deceitful
accounting around central bank gold reserves and gold
leasing practically compel such a conclusion.

We'll watch for the G-7's communique and hope to
dispatch it later.

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

* * *

G-7 Statement Said to Appease All;
Finance Ministers Said to Stress Flexibility and Stability

By Rachel Koning
CBS.MarketWatch.com
4:01p ET Saturday, February 7, 2004

BOCA RATON, Fla. -- Group of Seven finance ministers have
reportedly reached an agreement on currencies and are
expected to issue a statement later encouraging
foreign-exchange flexibility while discouraging excessive
volatility.

The mix of words is seen giving the three major blocs, the
United States, the European Union, and Japan, want they
wanted heading into the weekend meetings.

"The communique continues to call for more flexibility in
exchange rates," said one source.

Earlier, an aide to the European delegation said European
officials had negotiated successfully to include a call for more
stability, although the statement is expected to stress
avoidance of "excessive volatility."

The euro has jumped a sharp 12 percent vs. the dollar since
the G-7 called for "flexibility" at the conclusion of the group's
September meeting.

The language was intended to deter currency market intervention
by Asian nations but instead was taken as a signal by markets
to sell the dollar against a host of currencies, as investors bet
European and U.S. officials would do little to stop the dollar's
fall after stressing hands-off "flexibility" in such a high-profile
venue.

Because Japan has continued to intervene to prop up
dollar-yen, most of the upward pressure has been on the
euro, cutting the competitiveness of its exports.

Group of Seven finance officials meeting Saturday were
challenged to reach consensus on what, if anything, should
be done to remedy a plunging dollar.

Citing the Group of Seven's last communiqu, U.S. Treasury
Secretary John Snow reemphasized Saturday a focus on
domestic economic stimulus and global growth, as the world's
most influential finance officials meet here.

At issue is whether the ministers and central bankers of the
seven industrial powers will rework language from that
September statement issued in Dubai -- which opened the
door to a deeper dollar drop -- when the group issues a new
communiqu Saturday evening.

Europeans are believed to be pushing for agreement that
foreign exchange trade should be more stable, while the
Japanese will emphasize currency values should reflect
economic strength.

"Things are going in the right direction, toward clarifying the
Dubai language," a European aide told Agence
France-Presse earlier Saturday.

Because a weaker dollar helps U.S. exports by making
American goods more attractive on global markets and may
improve President Bush's chances for reelection, the United
States is seen supporting a renewal of the Dubai statement.

Japan and Europe, meanwhile, are seeking greater clarity on
currency volatility, in hopes the sting from a falling dollar on
their respective economies will ease.

That Dubai statement called for exchange rate "flexibility" and
was seen as a criticism of Japanese and Chinese policies to
artificially deflate their currencies vs. the dollar, helping their
own exports.

Instead, currency markets read the statement as assurance
U.S. and European officials would do little to slow the dollar's
descent.

Investors have been selling dollars on concerns the United
States is vulnerable to a reversal of the foreign capital flows
that have so far financed its record trade and federal budget
shortfalls.

Adding to dollar pressure, U.S. interest rates remain at
four-decade lows and the Federal Reserve has pledged
patience with raising rates. Low rates makes U.S.
investments less inviting for foreigners.

Snow was asked ahead of bilateral meetings with his
Japanese counterpart Saturday morning whether concern
over currency volatility would overshadow an emphasis on
spurring domestic demand.

"The focus on the conference from my point of view will
continue to be growth and what we as ministers can do to
build support for higher growth in our domestic economies
of our countries and the economies of the developing world,"
Snow said.

"We have had a growth gap, a growth deficit, for some time
and the communiqu that came out of Dubai focused on the
importance of growth and to the things each of us can do in
our own countries to encourage greater growth."

Snow said Saturday that U.S. tax reductions have produced
higher U.S. growth rates and as a result, will benefit the
global recovery.

Officials have grumbled that the European Union has unfairly
shouldered the bulk of the dollar's decline, putting its own
economic recovery at risk.

One euro would buy $1.12 in September. It brings $1.2530
currently and last month grazed $1.29, its richest worth since
its 1999 launch.

Many analysts, European exporters, and finance authorities
have said a euro around $1.30-$1.35 would pose significant
stress on the EU economy.

The dollar has surrendered 7.5 percent against the yen, with
the dollar worth 115 yen just after the Sept. 20 G-7 meeting
and hitting a 3 1/2-year low around 105.20 this week. The
decline would have been steeper were it not for record
spending on intervention -- selling yen for dollars on open
currency markets -- by the Japanese government.

Japanese officials have said that their nation's rate of growth
doesn't justify the yen's current worth.

The greenback has lost roughly 10 percent vs. the British
pound and hit multiyear lows against the Swiss franc and
Canadian and Australian dollars since September.

Other analysts think Saturday's statement might not be
amended at all, in large part because no consensus will be
reached.

The U.S. and Japan think the ECB should cut interest rates
to ease economic pressure from a surging currency. Europe
and Japan think the United States should cut its budget and
trade deficits, while Europe and the United States are in
agreement that Japan -- and China -- should scrap
intervention policies and let their currencies rise vs. the
greenback as the market dictates.

The emphasis other nations are putting on the global risks
from record U.S. trade and budget gaps is apparent. U.S.
deficits were raised in all of the bilateral meetings Snow held
on Friday, a Treasury official said.

The White House earlier this month presented its FY 2005
budget to Congress, projecting a $521 billion deficit this year.
The administration projects that deficit will gradually fall to
$237 billion by 2009.

* * *

U.S., allies stress need to promote global growth;
still at odds over dollar, deficits

By Martin Crutsinger
Associated Press Economics Writer
Saturday, February 7, 2004

BOCA RATON, Fla. (AP) -- The United States and its major
economic allies wrapped up a contentious economic summit
Saturday with all countries agreeing on the importance of
world economic growth but bickering over how to bring it
about.

"The focus ... from my point of view will continue to be
growth and what we ministers can do to build support for
higher growth in our domestic economies," Treasury
Secretary John Snow said on the second and final day of
talks. "We have had a growth gap, a growth deficit, for
some time."

Snow said he was emphasizing in his one-on-one
discussions and in the group meetings alike that President
Bush's tax cuts "have begun to have real effects in
producing higher growth rates in our economy, and that
will benefit the world economy."

The other countries at the meeting view the Bush tax
policy as a main culprit for America's soaring budget
deficits.

Snow and Federal Reserve Chairman Alan Greenspan
were hosts for the discussions among the Group of
Seven wealthy industrial countries -- the United States,
Japan, Britain, France, Germany, Italy, and Canada
-- which were being held at a posh resort along Florida's
Gold Coast.

The main topics for the two days of meetings were how
to handle the steep slide in the value of the dollar and
America's soaring budget and trade deficits, which the
other rich countries consider serious threats to future
global growth.

During the discussions, the United States stressed a
need for flexibility in currency markets. Its justification
was that the dollar's skid of 20 percent over the past
year to record lows in recent weeks against the euro,
the common currency of 12 European countries, and
a smaller decline against the Japanese yen was
starting to bolster exports of America's beleaguered
manufacturing companies.

The Bush administration is hoping that rising U.S.
exports from a weaker dollar will halt a slide in
manufacturing jobs, which has now reached 2.8 million
over the 3 1/2 years of the administration and has
become a staple in Democratic attacks on Bush's
economic policies.

European officials, however, had hoped to get the G-7
on record against excessive volatility as a way of
stemming the dollar's decline against the euro, which
Europe fears will jeopardize its own economic
recovery by depressing sales of European
manufacturers.

Italian Finance Minister Giulio Tremonti suggested
Saturday that a possible compromise between the
U.S. and European positions might be for the G-7
to support greater flexibility in Asian currencies. That
was a veiled criticism of practices in Japan, China,
and other Asian countries that conduct massive
government interventions to keep the dollar from
declining too much against their currencies.

"The Europeans presented the possibility to introduce
something (in the final G-7 communique) to increase
the flexibility regarding Asian currencies," Tremonti
told reporters.

The G-7 group also discussed their joint efforts to choke
off sources of terrorist financing and to bolster the
reconstruction efforts in Iraq and Afghanistan, both
devastated in the aftermath of U.S.-led invasions.

Afghan Finance Minister Ashraf Ghani told reporters
Saturday said that his country would be seeking pledges
of another $28.5 billion in aid and reconstruction
financing over the next seven years at a donors'
conference of wealthy nations to be held in Berlin at the
end of March.

Hoping to deflect criticism about a budget deficit that the
White House announced Monday will hit an all-time high
of $521 billion, Snow stressed in a series of meetings
with individual countries Friday the importance the
administration attaches to achieving its goal of cutting
the deficit in half over the next five years.

The other message the administration was pushing was
a belief that faster growth in other countries will do a lot to
alleviate a U.S. trade deficit that also is at record levels.

While the United States thought it had a commitment from
Japan to lessen its own currency intervention, Japanese
Finance Minister Sadakazu Tanigaki told reporters that his
country intended to continue taking "appropriate steps"
such as intervention when it felt such action was needed.

* * *

U.S. Focuses on Growth, Europe on Currencies at G-7

By Brendan Murray and Katrin Bennold
Bloomberg News Service
Saturday, February 7, 2004

The Group of Seven industrial nations entered its main day
of talks in Florida split about whether to focus discussions
on the falling dollar or underperforming world economy.

As French Finance Minister Francis Mer and Germany's
Hans Eichel lobby counterparts to condemn the euro's 17
percent rise against the dollar in the past year, they face
resistance from U.S. Treasury Secretary John Snow, whose
economy is benefiting from the dollar's drop. Snow, the
meeting's host, wants the G-7 to focus on finding solutions
to "anemic" global growth.

"The focus of the conference from my point of view will
continue to be growth and what we as ministers can do to
build support for higher growth,'" Snow told reporters in Boca
Raton. "Growth has to continue to be at the top of the agenda.'

Eichel today described another priority, saying that European
ministers want "no abrupt changes' in exchange rates. Italian
Finance Minister Giulio Tremonti said ministers discussed
whether to call for more flexible Asian currencies. The Bank of
Japan has been selling yen and buying dollars, ultimately
leaving the euro to bear the brunt of the weakening dollar.

"We'd be much happier if the exchange rate were more
favorable" for Europe, Tremonti said. Italy, France, and
Germany have "the same'" view about exchange rates, the
Italian finance minister said.

European officials have said America's falling dollar, low
interest rates, and record budget deficits risk making the
recovery unsustainable, eventually hurting the global
economy. Officials from Germany and France have
suggested they would like to see language criticizing
"excessive volatility" in the statement the G-7 will publish
later today.

Japanese Finance Minister Sadakazu Tanigaki bridged the
difference, calling for currencies to reflect market
fundamentals without volatility.

"Currencies should reflect market fundamentals in stable
manner and that it is up to each nation to act against
excesses," Tanigaki told reporters after meeting Snow.
"G7 members mostly agree on the currency issue."

The euro rose as high as $1.2727 yesterday in New York,
about 1.3 percent below the record $1.2898 reached on
Jan. 12. It closed at $1.2705 at 5 p.m. New York time.

Currency markets "are feverish without having fever -- we
have to lower the temperature,' Mer said yesterday.

The G-7, which also includes the U.K. and Canada and
accounts for two-thirds of the global economy, meets four
times a year. U.K. Chancellor of the Exchequer Gordon
Brown and Canadian Finance Minister Ralph Goodale
yesterday both endorsed Snow's growth goal as they
arrived in the coastal resort of Boca Raton, 45 miles
north of Miami.

The International Monetary Fund forecasts that the U.S.
economy, the world's largest, will grow 4.6 percent this
year -- more than twice the 2 percent anticipated for the
euro zone. Snow has said he wants that disparity to be
narrowed and governments to suggest policies to do that.

European officials take a different view. Pointing to a
growing budget deficit in the United States, which has
been inflated by tax cuts and rising spending, Mer said
yesterday that the world's biggest economies should think
about the consequences of their policies on other economies.

"We are all interdependent,' Mer said, urging the U.S. to
reduce its budget gap. "Nobody can even temporarily think
that the way of solving their problems won't affect others,
and in turn them again.'

The concern that America is living beyond its means has
been one of the main reasons for investors to sell dollars over
the past two years. The White House earlier this week
projected its budget deficit to rise to $521 billion this fiscal
year from $374 billion in the year ended Sept. 30. Snow
maintains that shortfall is "manageable' and will be halved
over the next five years.

Europe's single currency has climbed 32 percent against the
dollar in two years, threatening to brake the continent's
export-led economic recovery -- another reason European
officials are pressing Snow to help stem the euro's climb.
From Paris-based L'Oreal SA to Germany's Adidas-Salomon
AG, exporters in the 12 nations sharing the euro account
for a fifth of the economy.

The European Central Bank's forecast for 1.6 percent growth
this year, up from 0.4 percent last year, assumes a euro at
$1.17. The currency's ascent since it last reached that level
in late November will trim half a percentage point off growth
until 2005, Bank of America Corp. estimated.

"Not everyone can come away a winner,' said Nancy
Roman, the president of investment consultancy the G-7
Group in Washington and soon to be a vice president at the
Council on Foreign Relations. "On the currency agenda,
someone is going to come away unhappy.'

* * *

G-7 Seeks Consensus on Dollar Drop

By Gernot Heller and John Parry
Reuters News Service
Saturday, February 7, 2004

BOCA RATON, Fla. -- World financial leaders meeting in
Florida struggled on Saturday for consensus on how to
steady global currency markets amid European and Japanese
worries a sliding U.S. dollar could spin out of control.

While comforted by a global economic recovery in the past
six months, many finance ministers and central bankers
from the Group of Seven wealthy nations are anxious about
the potential currency fallout from huge U.S. trade and
budget deficits.

The dollar's deficit-driven slide has accelerated since the
G7 last met in Dubai in September and concluded that more
flexible currency policies were needed around the world.

That statement was taken by most observers as a dig at
countries like China that fix their currencies to the U.S.
dollar. But European ministers say this needs to be spelled
out in the statement that will follow the Boca Raton meeting.

Italian Finance Minister Giulio Tremonti said European
ministers might push to alter the wording thrashed out in
Dubai so it is clearly aimed at Asian economies.

The euro has risen some 10 percent against the dollar since
the Dubai gathering, pinching European exporters.

"The hypothesis from the European side is referring to the
need for more flexibility of Asian currencies," Tremonti told
reporters before Saturday's meeting.

One way to ease European concerns might to be to "tweak"
the Dubai statement to say that while flexibility was desirable,
excessive volatility in relative currency values was not -- a bow
to Europe's fears its recovery could be stifled by a soaring
euro that makes its exports less competitive.

German Finance Minister Hans Eichel said as the formal G7
meeting began there was a general agreement that some
progress must be made on currency policy, although what
form that will take remained uncertain.

"We are all trying to find a common position," Eichel said of
his counterparts from the United States, Britain, Canada,
France, Italy and Japan. "Everybody knows that currency,
which is a very sensitive subject, will be a main discussion
point."

Other European officials, who requested anonymity, hinted
at movement toward an agreement on the statement's
language between the opening dinner on Friday night and
the formal G7 sessions on Saturday.

"Things have moved forward since yesterday evening," a
European delegate said. "It's moving toward a clarification."

Japan also wants more stable exchange rates -- which would
save it money by requiring fewer forays into currency markets
-- while reserving the right to buy dollars if needed to keep the
yen from rising too rapidly.

But it likely would oppose a broad reference to Asian currency
flexibility because this would be seen by markets as a rebuke
from G7 for Tokyo's unilateral intervention.

Japan's Finance Minister Sadakazu Tanigaki met U.S. Treasury
Secretary John Snow before the formal meeting on Saturday
and told Snow Japan would continue to act to cap the yen if it
moved out of line with the underlying economy.

Million-dollar yachts bobbed at anchor next to the 80-year-old
hotel on Florida's lush "Gold Coast" as the finance ministers
and central bankers debated inside how to keep expansion
going among the world's wealthy nations while helping rebuild
countries like Iraq.

The exclusive economic club will also look at ways to keep
terrorism at bay by going after militant groups' funding.

Snow on Saturday said he felt the meeting should chiefly
focus on sustainable expansion -- a message that plays well
in America during a presidential election year.

"The focus of the conference, from my point of view, will continue
to be growth and what we as ministers can do to build support
for higher growth in domestic economies of our countries and the
economies of the developing world."

G7 sources on Saturday said pledges to rein in national budget
shortfalls were likely to be a central theme of the group's final
communique.

However, the sources said the statement's wording would not
be finalized until later on Saturday. Ministers said central bankers
would be closely involved in that process.

The formal talks began at 9 a.m. (1400 GMT) on Saturday and
are expected to wrap up with the final statement around 5 p.m.
(2200 GMT).

Argentina may also come in for some heat. G7 officials who
requested anonymity said Buenos Aires would be told -- either
after the meeting or next week -- to be more flexible with private
creditors in slow-moving debt renegotiation talks. Argentina has
held firm with an offer of 25 cents on every dollar of nominal debt.

G7 sources said talks will also likely touch on how debt markets
in emerging market countries -- which have been providing cheap
funding for developing nations of late -- would be affected by rises
in benchmark interest rates in the G7 economies.

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