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Rothschilds say imf will revalue imf gold to create paper Original Source Link: (May no longer be active)
http://www.bloomberg.com/apps/news?pid=10000086&sid=ayfvrK.RtWBI&refer=latin_america``It is not clear that any gold would actually be sold'' under the proposal, N.M. Rothschild and Sons Ltd. said in a report e-mailed from Sydney today. ``It appears that the proposal is to revalue the IMF's'' gold reserves to the current market level, ``thus creating a paper gain.''
http://www.bloomberg.com/apps/news?pid=10000086&sid=ayfvrK.RtWBI&refer=latin_america
Gold Drops to Near Three-Month Low on Dollar, IMF Sale Concerns
Feb. 4 (Bloomberg) -- Gold fell for a second day in London, to near a 3-month low, amid the dollar's gain and concern G-7 officials may call for the International Monetary Fund to use its gold to cancel African debt.
The dollar was heading for its third weekly advance against the euro and yen after the Federal Reserve raised interest rates and on speculation a report later will show the U.S. employers added the most jobs in three months in January. A strengthening dollar reduces dollar-denominated gold's appeal for investors seeking to hedge against declines in the value of U.S. assets.
``Attention today is likely to be on the payroll figures and the G-7 meeting,'' James Moore, of the U.K.-based, BullionDesk.com, said in an e-mail today. ``Dollar-positive news is likely to add further pressure to the bearish tone.''
Gold for immediate delivery in London dropped as much as $1.56, or 0.4 percent, to $415.64 an ounce and was trading down $1.01, or 0.2 percent, at $416.20 as of 9:56 a.m. Prices touched $414.71 yesterday, the lowest since Oct. 14, and may drop as low as $409 today, Moore said.
The dollar was trading at $1.2965 per euro, up from $1.2975 late yesterday in New York, according to electronic currency- trading system EBS. The U.S. currency has gained 5 percent against the euro this year, as gold dropped that amount.
The jobs report, due from the Labor Department at 1:30 p.m. London time, may show U.S. employers hired 200,000 workers in January, according to a Bloomberg survey of economists. Gold rose to a 16-year closing high of $455.90 on Dec. 3, after the dollar slid to a record low against the euro, following the November figure, which lagged expectations.
Interest Rates
The Fed yesterday lifted its interest-rate target a quarter point for a sixth time since June, to 2.5 percent, and restated plans to continue increases at a ``measured'' pace. Higher rates may attract savers from Europe, further boosting the dollar against the euro. The European Central Bank has left its target at a six-decade low of 2 percent since June 2003.
U.K. Chancellor of the Exchequer Gordon Brown also said yesterday he hopes the Group of Seven most industrialized nations will agree in the next few weeks on a proposal to revalue the IMF's gold reserves to forgive debts, or suspend loan repayments, in Africa.
The G-7 begins a two-day meeting in London today, during which Brown said he will meet with IMF Managing Director Rodrigo de Rato, to discuss help for Africa and decide whether to extend a temporary delay on debt servicing by nations affected by December's tsunami in Asia.
IMF Gold
The IMF held 3,217 metric tons of gold as of January, according to the World Gold Council, worth more than $43 billion at current market prices. The bank keeps the value at the 1971 price of less than $41 an ounce in its accounts.
``It is not clear that any gold would actually be sold'' under the proposal, N.M. Rothschild and Sons Ltd. said in a report e-mailed from Sydney today. ``It appears that the proposal is to revalue the IMF's'' gold reserves to the current market level, ``thus creating a paper gain.''
Also, a sale would require an 85 percent vote in favor from the 184 countries, which are members of the IMF, according to its Web's site. Moreover, 17 percent of these voting rights rest with the U.S., which would need approval from Congress.
``We doubt that the necessary 85 percent of votes will be achieved to authorize this action, when the alternative, revaluation, is eminently sensible,'' John Reade, an analyst at UBS AG in London, said in an e-mailed report. ``But in the next few days we expect more talk on this issue to keep gold on the back foot.''
As a result, Reade cut his gold forecast from $440 an ounce in a month, to $410. He still expects the metal to rise back to $440 within three months, ``when we hope that common sense will have prevailed,'' he said.
Among other precious metals for immediate delivery in London; silver dropped 4 cents, or 0.6 percent, to $6.63 an ounce and palladium slipped 50 cents, or 0.3 percent, to $182.50. Platinum was the only gainer, advancing 50 cents, or 0.1 percent, to $866 an ounce.
To contact the reporter on this story:
Laura Humble in London lhumble1@bloomberg.net.
To contact the editor responsible for this story:
Stephen Farr at sfarr@bloomberg.net.
Last Updated: February 4, 2005 05:28 EST
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