- London, Friday 3 March 2000
More UK gold auctions mean more damage
The announcement today (Friday) by the UK Treasury that it will continue
the sale by regular auction of a major portion of the country's gold reserves
will deal a serious blow to the international gold market, according to
the World Gold Council.
The Treasury has ignored reasoned protests from the major players of
the important London gold market, many of whom have sought to persuade
the government that this system of auctions serves only to undermine the
gold price. If the Treasury insists on selling the UK's gold reserves
to a level far below those of comparable European economies - a policy
which we continue to oppose - then it should at least use the twice-daily
London fix for that purpose. The fix is a long-established and thoroughly
dependable means of trading gold. The system adopted by the UK Treasury,
as we have seen from the last four UK gold auctions, often serves to hammer
the price down, and to heighten market uncertainty.
A further point of criticism concerning the Treasury announcement of
continued gold auctions is that it appears to treat with lofty disdain
the National Audit Office, which is currently in the process of drawing
up a report on the first round of gold auctions, which started on 6th
July 1999. The NAO's report has not yet been completed and today's Treasury
announcement looks both like unseemly haste and a snub to the NAO.
Contacts:
Robert Pringle, director, Public Policy Centre, WGC, 020 7930 5171
Gary Mead, head of research, WGC, 020 7766 2719 (direct) and 01892 549525
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