-Caveat Lector-
from:
http://www.aci.net/kalliste/
<A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A>
-----
Gold Market
Gold Price Plunges as Britain Announces Sale of Reserves
Central Bank Overhang Goes On and On
Britain is to sell more than half its $6.5bn gold reserves over the next
few years, dealing another blow to the metal's diminishing role in the
international monetary system.
In response the gold price fell more than $8 at one stage to less than
$280 a troy ounce. Gold mining companies saw their share prices fall
sharply, with the currencies of gold producing nations also suffering.
The Treasury said it would sell 125 tonnes of gold in this financial
year. Similar amounts will be sold in succeeding years until official
holdings have been reduced from 715 to 300 tonnes.
Gold has long enjoyed a near mythical importance in the minds of central
bankers, as a hedge against inflation and a symbol of monetary
stability.
But a new generation thinks it more important to increase the return
that reserves earn.
The Treasury will replace the gold with foreign currency assets, mainly
government bonds. These will be split into roughly 40 per cent US
dollars, 40 per cent euros and 20 per cent Japanese yen - in line with
the existing composition of reserves.
Gold's share in the government's $15bn net reserves will fall from
nearly half to around 20 per cent. Studies cited by the Bank of England
last year suggest this proportion "provides a reserve composition
exposed to least risk".
The European Central Bank holds 15 per cent of its reserves as gold and
the UK would have had to contribute 140 tonnes had it chosen to join the
euro.
Initially gold will be auctioned every two months from July. Buyers will
be offered 400-ounce bars held in vaults beneath the Bank of England.
The Bank would prefer buyers to leave the gold there, although it says
"physical collection . . . will be possible".
Kelvin Williams, marketing director of South African mining group
Anglogold, argued the UK had "given everyone an opportunity to speculate
against them upfront". He was puzzled at the choice of sales method, but
is confident the market will absorb the sales "comfortably".
Yesterday's unexpected move prompted nervousness about sales by the
world's first division gold holders.
Switzerland has already signalled its willingness to sell 1,300 tonnes
after severing the franc's formal link to gold. The International
Monetary Fund is also likely to sell up to 10 per cent of its $30bn
holdings to finance poor country debt relief.
Traders are now looking nervously to the other big players - the US,
Germany, France and Italy - who have so far shown no inclination to
sell.
"The ultra-negative view, which is justifiable, is that the British are
looking to sell before everyone else," said Kamal Naqvi, analyst at
Macquarie Equities.
Gold's official role in Britain dates back at least to 1717, when Sir
Isaac Newton established the country's first gold standard.
By the beginning of this century nearly 60 countries had backed their
currencies with gold, with Britain then leading an exodus in 1931.
Gold relinquished its formal role as anchor of the international
monetary system in 1971, but by the end of that inflationary decade its
price had risen to $850 an ounce.
Despite robust private sector demand, the price has fallen two-thirds
since as central banks have sold or lent to the market.
The Financial Times, May 8, 1999
Der Fuhrer Invades Yugoslavia
NATO Bombs Chinese Embassy
We turned Belgrade light into darkness! We're Number 1!
The Chinese embassy was hit and set alight in heavy air raids on
Belgrade last night, as Nato stepped up pressure on Yugoslavia to yield
to latest international peace plans for Kosovo.
More than 20 Chinese embassy staff were taken to hospital, but officials
said none were seriously injured. The embassy was hit a few hours after
air raid sirens announced the end of a three-day lull in Nato attacks on
the capital.
Flashes came from the direction of power plants and the city was plunged
into darkness.
The attacks came as Nato prepared a diplomatic offensive to narrow
remaining differences with Russia and as the United Nations emerged from
the Kosovo sidelines with the naming of two special peace envoys and a
plan to despatch a humanitarian team to Belgrade.
Kofi Annan, UN secretary-general, named Carl Bildt, the former Swedish
premier who in 1996 and 1997 led the civilian effort to implement a
peace agreement in Bosnia, and Eduard Kukan, Slovakia's foreign
minister, as envoys to the region.
Mr Bildt said his first plan was to create an open framework for
dialogue between the UN, the European Union, Russia and the US. "There
must be more co-ordination of strategic aims," he said. "The campaign
has so far failed to stop the war and create the conditions for refugees
to return."
Mr Annan earlier said he believed Slobodan Milosevic, Yugoslav
president, was dropping his resistance to an international armed force.
"Milosevic's position has been no armed observers ... now he's talking
about a UN force, lightly armed," Mr Annan said. "My own sense is that
in the end we will find a way of putting a credible force - an armed
force - on the ground."
The Financial Times, May 8, 1999
China Nuclear Spying
Technical Links with China Questioned
Report also says FBI is clueless
A Senate committee has called for a reappraisal of a policy that allows
US satellites to be launched from Chinese rockets after concluding that
past launches had given China the means to improve its ballistic missile
systems.
A declassified report from the intelligence committee criticised the way
US intelligence agencies co-ordinated information about what it said was
an official Chinese plan to influence members of Congress through
campaign contributions in the 1996 elections. China has denied such an
effort.
The report is the latest assessment from Congress about whether national
security was damaged by transfers of technology to China.
Another report from a special House committee on technology transfers is
likely to be issued this month after months of haggling between the
committee, led by Christopher Cox, a Republican from California, and the
Administration over how much should be declassified.
Richard Shelby, the Republican chairman of the committee, said
yesterday: "Officials in the Administration and certain US aerospace
companies joined in a conspiracy of carelessness and recklessness that
allowed unlicensed, unauthorised transfers of technology."
He did not specify the companies but launches of satellites by Lockheed-
Martin, Hughes and Loral are cited in the report.
"We left the door open for [China] to abscond with a lot of our most
advanced space technologies, and we may never know the full extent of
what they got," he said.
Mr Shelby described as a "deadly combination" the conclusion that China
had been given technologies that could improve its ballistic missile
programme - and may have improved its nuclear warheads programme through
espionage at US national laboratories.
The committee is working on another report on the alleged nuclear theft.
Robert Kerrey, the ranking Democrat on the committee, said the policy
that allowed US satellites to be launched on Chinese rockets involved an
inherent conflict.
US satellite companies wanted China to have the best technology so
launches succeeded - but US national security required less reliable
launches, because the same technology was used to launch warheads.
The committee's report was backed by a 16-1 majority. It recommended an
independent study of the policy, and at the least improved US government
monitoring of launches, which Mr Kerrey described as "sloppy".
Mr Kerrey said it was particularly disturbing that Congress learned
about Chinese efforts to influence the 1996 elections not through
intelligence but through published reports. The report is critical of
the Federal Bureau of Investigation.
"The FBI often did not know what it had on file about a particular
subject unless and after they had made hand searches of records or asked
field offices to similarly search their records," it said.
The Financial Times, May 8, 1999
-----
Aloha, He'Ping,
Om, Shalom, Salaam.
Em Hotep, Peace Be,
Omnia Bona Bonis,
All My Relations.
Adieu, Adios, Aloha.
Amen.
Roads End
Kris
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