- News Release
UK Gold Auction: Time For Reflection
LONDON: Tuesday, 21 March 2000 - The fifth gold
auction by the Bank of England has again helped depress market sentiment.
The London gold fix this morning priced gold at $286.15 per troy ounce,
but the auction price of $285.25 was below the price obtained at the fourth
auction ($289.50) and substantially lower than that of the third auction
($293.50). This result can please no-one.
The Bank of England, the Treasury, and the British taxpayer must feel
let down by these auctions. The World Gold Council has long been a critic
of the sale of UK gold reserves, but today's auction has also been strongly
criticised by several leading City analysts, some of whom have already
gone on record as saying they find the result "disappointing".
It is time to reflect upon what the Treasury has done with the proceeds
from the sale of this gold. When it announced in May 1999 that 415 tonnes
of UK gold reserves (from a total of 715 tonnes) would be sold, it was
stated that 40 per cent of the proceeds would be invested in US dollars,
40 per cent in euros, and 20 per cent in Japanese yen. As the attached
chart shows, the investment in euros has been a clear failure. The price
of an ounce of gold (as measured in euros) has risen from €246.37 on the
day the euro was launched (January 1st 1999) to €293.80 yesterday (20th
March 2000) - a rise of 19.2 per cent. The US dollar has risen against
gold by about one per cent over the same period, while the Japanese yen
has risen against the price of gold, by about five per cent.
We hope the Treasury will now listen to the widespread view of the international
gold market, and end these auctions. If it must persist in selling UK
gold reserves - a policy which the WGC believes is unwise - then it should
do so through the London fix. The next auction is scheduled for May; there
is still time to act.
Please see accompanying PDF file for chart.
- Ends -
Contacts:
Miss Haruko Fukuda, chief executive, World Gold Council, telephone 020
7930 5171
Gary Mead, head of research, World Gold Council, telephone 020 7766 2719
(direct)
Keith Irons, chairman, Bankside Consultants, telephone 020 7220 7477 /
07885 356 639 |