Provided by "GoldAuthentic Money"

Conclusions:

• Germany has taken a decision not to sell gold until September 2005.

• It is most unlikely that the Bundesbank will change this policy, after September 2005.

• It is therefore, unlikely that Germany will sell any gold under the 2004 Central Bank Gold Agreement.

• This appears to be part of an ongoing process of a change of heart by the signatories of the central Bank Gold Agreement, signifying a desire to retain the gold they have in their reserves.

• This statement follows the announcement by Italy, that it has no plans to sell gold.

• This action is perhaps the most significant event in the history of gold in the last 25 years.

• Germany is selling 8.1 tonnes of gold, a further tranche of the 26 tonnes they decided to sell for the purpose of minting commemorative coins, a couple of years ago. These sales are not part of the 600 tonnes discussed in the last statement from the Bundesbank.

At "Gold - Authentic Money" we have been forecasting the decline, to cessation, of gold sales by the Central European Banks for the last two years. We have written article after article on the ascendancy of the U.S. $ and the decline of gold in "Official " eyes during all this time. We highlighted the developing division between Europe and the U.S. on gold and the $ fronts. This week's announcement from Germany and the earlier one from Italy, have confirmed that we are one of the only publications that fully understand this aspect of gold. We warned that this retraction of sales could take place as we warn again, concerning sales from France and other Central Banks!

The German announcement has huge implications for the whole gold market and the price of gold will stem, it is important that you subscribe to see our work. This aspect could well prove to be the most influential facet of gold next year and the entire decade starting from now.

The Announcement.
And still no-one wants to say it! Still the expectation of more gold sales announcements, still the persistent belief that Central Banks want to sell more gold. But the Bundesbank announcement following that made by the Bank of Italy, tells a different tale.

On Monday 13^th of December, the Bundesbank announced that it would not be taking up its option to sell 120 tonnes of Gold in 2004/5, under the Central Bank Gold Agreement.

It would continue with the programme, started a in 2003 to sell 26 tonnes of gold for the purpose of minting gold commemorative coins, to mark the advent of the Euro, by selling 8.1 tonnes in 2004.

Please understand that when talking of the Central Bank Gold Agreement year, we are talking of the year starting on the 26th September 2004 running to the year finishing on the 25th September 2005.

Sales for 2005, would be discussed next year, they said.

Alex Weber has previously warned the market of a change of heart by the Bundesbank some time ago when he said, "gold was an effective counter to the swings in the $". This was a sound financial decision that overrode the concept of selling gold, for investments that would 'yield a return'. Indeed, Weber added to this, the statement that "the gold reserves of the Bundesbank are part of our national wealth and have great symbolic value to the population". This says, between the lines, that the Bundesbank no longer wants to sell its gold! If one dwells on this attitude alongside the statement it is most unlikely that there will be a change of heart back to selling the gold. It is most reasonable to conclude that this withdrawal from selling the initial 120 tonnes of the proposed 600 tonnes, will become permanent. Following this, we believe that Germany will not sell gold under the 2004 Central Bank Gold Agreement, whatsoever. A logical extension of this would be to conclude that Germany will not be party to a future Central Bank Gold Agreement.

Italian Sales?
When Italy announced "it had no plans to sell gold" the market was taken aback, in disbelief. Even now the gold bullion world still expects Italy to sell some of its gold. This refusal to accept the statements of the Central Bankers goes back to 1999, when the Washington Agreement was first announced. Perhaps now this action will be definitive enough to show that the tide has changed.

French Sales?
Turning to France, another likely development is expected. It appeared that the pressure placed on the President of the Banque de France, Noyer, by Sarkovsky was the pressure that started the French selling gold. The market reports that 8 tonnes was sold by the Banque de France in October, this year, just prior to the departure of Minister Sarkovsky. The way is now open for France to follow the same route as Germany and withdraw from the market as sellers. It is widely known that Noyer was most unhappy about selling France's 'family Jewels'. No doubt if the new Finance Minister is agreeable, the sales will be stopped too. After all if two of the three potential sellers among the signatories to the agreement are not going to sell, why should France, with its even greater love of gold go ahead.

Why?
To fully understand their thinking go back to 1968 and the years following when as the U.S. $ began to flood Europe, President de Gaulle of France, led the European nations in selling these $s for gold as long as the U.S. kept the 'gold window' open. The history of a divergence on gold and devaluing U.S. $s goes back even further to the time when the U.S devalued the $ by raising the gold price from $20 to $ 35, causing the gold of Europe to cross the Atlantic to Fort Knox. In 1968 it swam back, where it has sat since then. Now again, in the face of a decaying $, Europe is not too keen to see $ replace their gold in their coffers. After all, "you fool me once, shame on you, you fool me twice, shame on me", goes the saying.

The full significance of these developments is enormous, far beyond the metal gold, by itself. This is a Monetary issue. It is a major step, not only to shy away from the $, which the U.S Administration wants, despite the empty statements supporting a strong $, but a monetary step towards the full rehabilitation of gold as a key reserve asset.

The fact that this is a step towards the recognition of gold as an asset to be preferred by the Central Banks, should prove a signal to Institutional Investors, to follow the same road. And as the ripple flows through the investment world, so the preference will be voiced by individuals in growing numbers.

Of all the fundamental factors that are 'gold positive' , this above all others stands as the beacon towards which the opinion of gold will rally around.

Current picture

• The present picture is that Switzerland will continue selling around 7 - 8 tonnes of gold per week until around the end of January, at which time ALL Swiss sales will cease.

• Holland will sell up to 150 tonnes when it deems fit, probably only when price 'spikes' are seen.

• With the statements from most potentially selling, Central Banks that they will sell when they feel the price is right, it is likely that Central Bank Gold sales will only resume when there is a "spike" in the gold price.

• Such sales will then act as a stabilising force on the gold price, only. This will be in line with the required behaviour of a Reserve Asset.

• Argentina follows both China and Russia in buying gold for their Reserves [bought in 2003]. Who will follow them and will they increase their purchases?

The 2004 Central Bank Gold Agreement - details:

The 2004 Central Bank Gold Agreement [which began on the 27th of September] 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 are: