The week ended 16th June saw one signatory to the Central Bank Gold Agreement sell 1.5 tonnes of gold. The WGC expects sales this CBGA year to be at or close to the 500 tonne annual limit (but it is not yet certain whether sales in the later years will reach the limit).

A report was issued this week by a newspaper saying that 209 tonne of gold were going to be sold in the next three months.

We feel that it is necessary to bring some balance to such reports, as the reality may well be very different. A body like the WGC is very careful in the words it uses and would never state that 209 tonnes of gold are to be sold in the next three months.

What should have been said was that, "In order to reach the "ceiling" limit of sales by the Central Bank Gold Agreement" by the 26th September 2006 [the end of the second year of the Agreement], a further 209 tonnes of gold needs to be sold by the signatories and there was no reason to think that this level would not be reached. But we believe that the final figure for this year will fall short of the 500 tonne limit.

It is understood by all, that the "ceiling" was not a target of 500 tonnes per year. It should be stated that the signatories are under no obligation whatsoever, to reach this "ceiling". Indeed, Germany has decided not to sell its gold, to date. France can change its mind at any time, so can any other signatories who previously stated their intention to sell.

It is clear from the above figures [see the table] that the announced sales intentions are not sufficient to reach the "ceiling" of 500 tonnes a year. If they went flat out from now on they would only have enough to reach the "ceiling this year and next, leaving the final two years with no gold left to sell.

In fact no conclusion of their intentions can be reached at the moment as they have lost the transparency they declared they wanted in the "Washington [or the first 5-year gold selling] Agreement". Now the shroud of mystery as to their intentions hangs heavy on this story.

But this time round, they are not trying to make the market believe they are ongoing sellers, but they appear to want to hold off from alarming the market that they are not going to be heavy sellers, for fear of driving the price upwards. Perhaps they feel it is far better that that the market should think they may be ongoing sellers and then fade into the background of inactivity, having failed to reach that ceiling, leaving the market with no statement that they have ceased selling!

If the signatories to the Central Bank Gold Agreement do intend to sell 209 tonnes in the next three months it would require sales of around 17 tonnes a week or even bigger tonnages in short bursts or a short complete burst of selling.

The market would then interpret such heavy sales as an attack on gold, one with no follow though, unless new sales were announced. Such a policy would go completely against the spirit of both the Washington Agreement" and the "Central Bank Gold Agreement"! We therefore conclude that such heavy sales will not occur in the next three months.

HIGHLIGHTS in "Gold Forecaster - Global Watch" week of 26th June 2006
Silver - COT, Gold : Silver Ratio EDR.to, SSRI, PAAS, SIL, SLW / Platinum.
SHARES: HUI, NEM, FCX, NG, VGZ, GOLD, DROOY, GG, LIHRY, GLG, GFI, Portfolio
1-2. Market Forecasts / Short-term forecasts across the Board!  2-3. Comex Update
3-14. Central Bank gold Sales in 2006 / Gold E.T.F. building while the price falls/China, the Global Economy and the strains its under/ A Buffalo stampede in gold/ U.S. $ & its Prospects/ The Oil crisis / Gold: Oil Ratio / Dow Jones / Technical Analysis of the Gold Price: Long / Gold price drivers 2006 / Short term in the U.S. $ / Treasury Notes / CRB Index
15 - 30. International Gold Markets / Silver / Gold vs. Silver / Gold: Silver Ratio / Platinum / Silver & Gold Shares

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