Chancellor Brown did not suggest the actual sale of gold by the I.M.F. just the revaluation of their gold. With the valuation of Gold at around $40 an ounce, by the I.M.F. he highlighted an archaic issue at the I.M.F. that has lain 'dormant for decades and should be addressed. The valuation stems from the Articles governing the I.M.F. Chancellor Brown, a man who would have been wiser to have stayed quiet on the issue, given his complete failure in handling U.K. gold reserves, highlighted this pertinent issue at the I.M.F. His anti-gold stance is a matter of record and one that has resulted in his exclusion from the present discussions on gold currently taking place amongst Eurozone Bankers.

He will have no part in these discussions which cover the handling of Eurozone gold. The U.K. relinquishes its part in European gold sales when the "Washington Agreement" expires in September They were absent from the "2004 Central Bank Gold Agreement", which commences in September of this year. Was that because the Eurozone Bankers hold a different view to his on gold's role as a reserve asset? - Likely so!

The outcome of these discussions is significant and will determine just what sales will, actually, take place under the 2004 Central Bank Gold Agreement, irrespective of the ceiling of 500 tonnes per annum set within this agreement.

So in view of these Eurozone discussions, the issue of the valuation of Gold by the I.M.F in its reserves happens at good time.

Why should gold be valued at $40 an ounce? Is this a victory for small minded bureaucrats trying to impose their perceptions of the real world, on the rest of us? We think not. Most likely it is the unwieldy nature of the policy making structure of the I.M.F. which requires 85% of the total voting power of the I.M.F. to make policy decisions. That the U.S. holds 17.3% of these votes, gives it a veto over such decisions, anyway. The cessation of U.S. sales of gold decades ago and their retention of gold reserves speaks volumes on their "Gold Policy".

But the I.M.F. has a record of using the real market gold price in sales and purchases of gold amongst members. In the case of Brazil and Mexico their gold was bought and sold in a sort of "put through" deal that resulted in the full value of the gold, with the deduction of this 'book' value of gold, being used to eliminate the debt of those countries to the I.M.F.

So when push came to shove, the I.M.F. did recognise gold's true value, despite their protests that this was an "exceptional, once-off" action. No doubt there could be future 'exceptional circumstances?

If Gold is still valued at the $40 level, what is the real attitude of the I.M.F. and the opinion of at least the majority of its members towards their gold held by the I.M.F.? Here is the full text of that opinion: -

"It is an undervalued asset held by the IMF, and provides a fundamental strength to its balance sheet. Gold holdings provide the IMF with operational manoeuvrability both as regards the use of its resources and through adding credibility to its precautionary balances. In these respects, the benefits of the IMF's gold holdings are passed on to the membership at large, to both creditors and debtors. The IMF should continue to hold a relatively large amount of gold among its assets, not only for prudential reasons, but also to meet unforeseen contingencies."

It seems unlikely that this attitude would allow the real value of these assets to support debt write offs. It would appear that they had put the matter to rest by such a policy. We would hope that the valuation issue be raised in the context of a solid realistic, monetary role for gold. We have no doubt that the results of Europe's discussions on gold will have a bearing on the I.M.F.'s valuation of gold.

Chancellor Brown's remarks no doubt irritated Central Banker in Europe. We believe that significant announcements from certain Central Banks are in the offing, in the near future. We are giving details and insight on this subject in the next issue of "Gold - Authentic Money" discussing this further and detailing where this story is going!

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