The expected confirmations of gold sales from the signatories to the 2004 Central Bank Gold Agreement never came. Indeed, the most significant feature of the meeting of the G7 in Washington in October 2004 was the deafening silence on gold from those expected to make announcements. But no, their voices were still.

• Italy's central bank head Antonio Fazio has confirmed that he "will say something in Washington" on Italy's position on gold. - What did we hear? - Silence!
• We expected an announcement from Germany in Washington. - What did we hear? - Silence!
• France indicated earlier that it may not make any announcement until 2005 early. Nothing heard!
• Indeed we expected the signatories, as a group, would have made a clarifying statement. - What did we hear? - Silence!

Why the silence?

Could the "deafening silence" be because further announcements not to sell, after Italy's statement of no sales would send the gold price up dramatically? The failure to confirm these sales indicates that no sales will take place in addition to those so far announced.

The present picture is that Switzerland will continue selling around 7 - 8 tonnes of gold per week and Holland will sell up to 150 tonnes when it deems fit, probably only when price 'spikes'are seen. Apart from these, it is reasonable to conclude that Central Bank Gold sales have virtually ceased, until there is a "spike" in the gold price.

We were told so long in advance of the new agreement and its ceilings. So much talk has been going on about "options to sell", and intentions to sell from France and Germany and that Italy would not be selling. But in the light of their procrastination, we cannot accept that sales will take place from these nations until their word become solid commitments!

Previously we have said that the Central Bankers involved would not make a statement that would disrupt the market. It is true to say that the only disruption that could now occur to the gold markets, cannot be on the announcements on what is to be sold, but on the amounts not to be sold. At what point should the market itself recognise that no more sales are on the way?

Many are still waiting for the signatories of the 2004 Central Gold Agreement to announce their future gold sales. But the new agreement came into being over a week ago. It has commenced, so what sales have been announced, so far?

 • Switzerland's sales should be completed by early January 2005.

 • To make the point more forcefully, the new agreement having started, finds that of the permitted 500 tonnes sales per annum permitted, there is, presently, a shortfall on the total ceiling, on the five years total, of 2,220 tonnes!

Sales announcements can still come, but we were assured by the signatories to the original "Washington Agreement" that the intention of the agreement was to give transparency to their intentions regarding gold. So their silence should be taken as transparent as well. Hence, if no further sales announcements have been made, then no further sales will take place, unless such transparency has been abandoned?

The "Red Herring" of I.M.F. Gold revaluation.
Instead, the voice Britain's Chancellor of the Exchequer, Brown, throwing in a "red herring" on the revaluation of Gold, was heard asking that the difference between the extraordinary valuation of gold by the I.M.F. at $40+ an ounce and the real market value, ten times higher, could be given away to the poor countries. What is perhaps more surprising is the way it was supposedly taken seriously. Or was it? The conclusion that came on this issue was that "more work would be done on it". Please note that Britain's position was on the back of having sold the bulk of their holdings at levels well below the current market prices. And remember that Britain, having been part of the "Washington Agreement", was excluded from the 2004 agreement. So Britain, through Brown appears unqualified to postulate on what other people should do with their gold. Not that that would stop Mr Brown from committing other people's money to his cause. In no way could one even think that he represented any other nation or their stance on gold. But it was a good smokescreen that kept commentators busy.

The I.M.F.'s position on gold is by now, well known: -

"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."

So it was never likely that the I.M.F. would revalue its gold only to give away the bulk of its value, was it?

But we do hope that the valuation issue will be raised in the context of a solid realistic, monetary role for gold at some stage. We do expect that the discussions on gold in its function, as reserves, by Eurozone bankers, will have a bearing on the I.M.F.'s future valuation of gold. We further hope that their discussions, held earlier this year confirmed the role of gold as a present and future structural part of their and subsequently, all nations Monetary reserves. But the road has begun to be walked. So it is unlikely that even Mr Wolfensehn's support for Mr Brown will have any affect, for countries are becoming increasingly aware of the value of their Gold reserves as we head into the murky waters of the future.

The 2004 Central Bank Gold Agreement - details: -

The 2004 Central Bank Gold Agreement [set to begin on the 27th of September, as announced on the 8th of March] is as follows: -

In the interest of clarifying their intentions with respect to their gold holdings, the undersigned institutions make the following statement:

1. Gold will remain an important element of global monetary reserves.
2. The gold sales already decided and to be decided by the undersigned institutions will be achieved through a concerted programme of sales over a period of five years, starting on 27 September 2004, just after the end of the previous agreement. Annual sales will not exceed 500 tons and total sales over this period will not exceed 2,500 tons.
3. Over this period, the signatories to this agreement have agreed that the total amount of their gold leasings and the total amount of their use of gold futures and options will not exceed the amounts prevailing at the date of the signature of the previous agreement.

This agreement will be reviewed after five years.

The signatories to the Agreement will be:

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