German Finance Ministry denies wanting to sell gold


By Iain Rogers
Saturday, March 29, 2008

BERLIN -- Germany's Finance Ministry said today a magazine report that the government wants the Bundesbank to sell some of its gold reserves to help ease pressure on the federal budget was untrue.

Der Spiegel magazine reported in a preview of its latest edition that Finance Ministry State Secretary Werner Gatzer had proposed selling part of the central bank's gold reserves, currently worth around 65 billion euros ($103 billion).

According to the plan, the proceeds could then be either invested to earn interest or debt could be paid off freeing up cash that would have been used to for interest payments, the magazine said, citing unidentified participants in a March 13 meeting of budget experts.

"This claim is untrue," Finance Ministry spokesman Torsten Albig said in an emailed statement.

"State Secretary Gatzer has at no time raised the issue of such a proposal. The Finance Ministry considers such a debate neither appropriate nor likely to lead to the desired results.

"The Bundesbank's gold reserves are not available to be used for budgetary purposes."

Germany is a signatory to the Central Bank Gold Agreement, under which 15 European central banks agreed to limit their sales of gold over a five-year period to 2,500 tonnes, with annual sales limited to 500 tonnes.

Bundesbank President Axel Weber said this month the bank would probably hold on to the vast bulk of its reserves in the next year of the agreement, beginning in September.

The Bundesbank is the second-largest holder of gold behind the U.S. Federal Reserve and announced in October it would sell a maximum of 8 tonnes of gold to the finance ministry to mint coins in the fourth year of the agreement.

Gold prices have more than doubled in the last five years, lifting the value of central bank reserves.

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