The World Gold Council calls on
the Swiss authorities to end the damaging uncertainty following the
untimely release of the report of the expert group on the revision of
the Swiss currency law. This report, which inter
alia recommends large-scale sales of gold from
the Swiss reserves, has resulted in damaging uncertainty to the world's
gold market.
The statement of the Swiss Finance Department
(EFD) of 24 October, and subsequent press coverage, leaves unclear to
what extent the Swiss authorities endorse the proposal of the panel
of experts.
The best indications of their views, according
to the 24 October statement, are:
- that there should be "a limit to
the extent of disposal/transfer" of gold reserves;
- that they "prefer to stay with
the original concept which is based on simply making it possible to
dispose of gold to a counter-value of CHF7 billions" ($4.75 billion,
or about 460 tonnes at $320 per ounce; this was originally intended
to finance the establishment of a humanitarian fund); but
- that "the additional gold reserves
not needed for monetary policy would remain the property of the National
Bank and be managed by them or by third parties authorised by them".
The timing and scale of any gold sales for this purpose are left completely
open;
The Council welcomes the recognition by
the report of the advantages of gold as a reserve asset, especially
for a country like Switzerland, a major financial centre. The report
states that a relatively high gold reserve "reflects the fact that
many depositors view gold as the only asset which keeps its value over
the centuries". The positive view of gold has not been reflected
in the media coverage of the Swiss report.
The World Gold Council points out that
all these proposals are subject to decisions by parliament and popular
referendums. It is considered unlikely that the referendum on the proposed
Solidarity Fund can take place before 2000 at the earliest.
Press Contacts:
R. Pringle (Switzerland)
D. Ware (London)
G. Milling-Stanley (New York)
Note to Editors
On Friday 24 October an expert group, led jointly by representatives
of the Swiss Finance Ministry and Swiss National Bank, produced a report
on reform of the country's currency law which, among a number of proposals,
makes recommendations on Swiss gold holdings. Over the course of time,
it is suggested that 1,400 tonnes of the country's reserves (currently
2,590 tonnes) should be sold off for general state and/or cantonal purposes
(the precise use to be decided later).
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