Bundesbank president: I never wanted to sell gold -- honest!

Section:

Bundesbank to Limit Gold Sales
to 8 Tons in 1st Year of Agreement

By Laura Humble
Bloomberg News Service
Monday, December 20, 2004

http://www.bloomberg.com/news/markets/commodities.html

LONDON -- Germany's Bundesbank, the world's second-biggest
gold holder, will sell less than 7 percent of the amount allowed
under a European accord, resisting calls to use bullion to help
plug the government's budget deficit.

Eight metric tons of coins will be sold, the Bundesbank said in
a statement. It was permitted to sell 120 tons of gold under an
agreement that took effect in September, which caps annual
sales by 15 participating banks at a total of 500 tons through
2009. The other banks will be able to use the Bundesbank's
quota.

"We haven't taken a decision about 2005," Hans-Helmut Kotz,
a Bundesbank board member, said today in an interview in
Frankfurt. "That will happen some time next year."

German Finance Minister Hans Eichel said last week the
Bundesbank should sell some gold reserves and use interest
from the sale to fill the budget gap, Bild am Sonntag
newspaper reported. Germany's deficit has exceeded
European Union limits of 3 percent of gross domestic
product for three years.

"We don't feel that we've been put under pressure by
Eichel," Kotz said. Eichel expects this year's deficit
in Germany, Europe's largest economy, to reach 3.75
percent of GDP.

Germany had 3,433 tons of bullion as of October,
second only to the U.S. Federal Reserve's holding of
8,136 tons, according to the London-based World Gold
Council. The International Monetary Fund has the
third-largest hoard, followed by France and Italy.

The Bundesbank's board had been split over a sale, with
President Axel Weber and Kotz in favor and the other
six members opposed, the Financial Times Deutschland
reported today, without citing anyone. The European
Central Bank, the 12 euro-region central banks, the Swiss
National Bank, and Sweden's Riksbank participate in the
accord.

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