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GATA: European Central Bank Gold Sales Repeatedly Cap Price Around $440

Posted on: Thursday, 7 July 2005, 12:00 CDT

The price of gold has been capped at $440 per ounce since last December by repeated selling of gold reserves by European central banks and the European Central Bank itself, the Gold Anti-Trust Action Committee disclosed today.

GATA's finding was based on the research of its consultant, gold market expert John Brimelow of Aegis Capital in New York.

"The ECB reported on Wednesday a sale of 360 million euros in gold last week, 996,592 ounces at the bank's new book value for gold, or 31 tonnes," Brimelow said today. "This is a huge amount, matched only by the sale of 47 tonnes announced at the end of March (but reported only in May) and a 31.9-tonnes sale last December last year."

Each of these sales corresponded with gold's penetration of the $440 price level, as can been seen at the one-year gold price chart here: http://www.kitco.com/.

"An indisputable pattern has now developed for the ECB to step forward as a massive seller when gold approaches the $440s," Brimelow said. "Curiously, the euro price of gold does not seem to be as sensitive an issue with the ECB."

The massive selling of gold in recent months by European central banks, Brimelow added, suggests that they will be obliged to suspend sales in September if they are to keep within the volume limits they set for themselves in the renewal of the Washington Agreement on Gold.

The latest ECB gold sales were shown on the bank's consolidated financial report for July 1, posted this week on the Internet here: http://www.ecb.de/press/pr/wfs/2005/html/fs050706.en.html.

Brimelow's research echoed comments made Tuesday by John Embry, chief investment strategist for Sprott Asset Management of Toronto, during an interview with Report on Business Television in Canada. Embry, who will speak at GATA's Gold Rush 21 conference in Dawson City, Yukon Territory, Canada, from August 7 to 9, likened the current intervention of central banks against the gold price to their coordinated selling of gold in the 1960s via what was called the London Gold Pool. Embry noted that market demand for bullion eventually overwhelmed central bank supplies then and he predicted a similar outcome soon.

GATA Chairman Bill Murphy today repeated the organization's belief that, because of their sales and leasing of gold and their false accounting of leased gold as gold still in the vault, central banks possess only a fraction of the gold they claim to have. Murphy added that the purpose of central bank gold sales and leasing is not really what is represented by the banks -- to raise money from a "dead asset" -- but rather to manipulate the currency and precious metals markets and deceive them about reckless government monetary policies.

Source: Business Wire

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