Central Bank Gold Selling Likely to Fall

By Heather Draper
Dow Jones Newswires
Monday, September 26, 2005
 

DENVER -- Gold sales by central banks will likely decline in the near term as gold prices continue to climb, the chairman of the World Gold Council said Monday.

"There has been a turnaround in attitude," said WGC Chairman Pierre Lassonde, who is also the president of Newmont Mining Corp. "There will probably be less central bank selling going forward ...especially in Europe."

Lassonde was speaking at the Denver Gold Forum, being held in
downtown Denver Monday through Wednesday.

Central Banks hold about 19% of above-ground gold supplies, he said.

About one-third of the global gold supply each year is from gold recycling or gold that moves in and out of the market, he said, and the gold industry needed to find a strategy to better control that portion of gold supplies.

In 2003, the World Gold Council developed a marketing strategy aimed at curbing recycled gold sales and boosting demand.

Those efforts, which included promotions in Asia to encourage buying gold as an investment and developing the gold Exchange-Traded Fund, helped boost global gold demand by nearly 200 tons last year, Lassonde said.

He noted that every 100 tons of additional demand equates to a rise of about $10 an ounce in the gold price during a bull market.

Lassonde, who is often cited for his gold price forecasts, told the gold forum audience that because he was representing the World Gold Council, he couldn't make any gold price forecasts Monday.

On the sidelines of the conference, he reiterated his earlier prediction that gold would hit $525 an ounce by early next year and hinted that he would revise that forecast during a Newmont Mining presentation at the forum on Wednesday.
 

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