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IMF GOLD SALES FIGHT HEATS UP, JESSE HELMS SIDES WITH POOR AFRICANS
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(June 29,1999) Who's trying to sell gold now? The IMF wants to sell 300 tonnes of gold to bail out banks that lent money to the Third World. That's good for the banks, but it would only mean more poverty for these poorest countries.
(June 29,1999) Gold has increasingly become a political football lately. There's something about "idle" gold reserves which just seems to stimulate bright ideas (especially among politicians) about what to do with the stuff. In a former time, "idle" was exactly your wish for your gold. Gold reserves were just that: reserves. Gold was part of the wealth of a nation, a bank, a family, or an individual. It was 'in reserve' for protection, security and strength. But today we seem to find it irresistible to 'do something' with gold.

Bill Clinton agrees with the International Monetary Fund that we should take some of its reserve gold and 'do something' about relieving the debt burdens of some of the poorest nations on earth. Maybe he imagines that this is what the IMF gold reserve was put aside for: so that we could someday sell it off and make whole the banks who lent money in the Third World, banks who otherwise have scant chance of recouping their investment.

But the IMF gold sales are not going to happen without Congressional approval, and that won't happen without a fight. The World Gold Council in its Public Attitudes Study showed that the majority of the U.S. public is opposed to the Clinton administration's support for IMF gold sales by 2-to-1. Domestic gold producers oppose the sale, fearing its effect on prices, as do South African gold mining officials who are lobbying against the sale.

South Africa has some of the highest-cost gold production in the world, and they employ tens of thousands of people in their labor-intensive, deep mines. Many South African mines have been shut down with the latest slide in gold prices, and lower prices would close more mines and put more (mostly black) miners out of work.

According to Dow Jones News, U.S. Senate Foreign Relations Committee Chairman Jesse Helms of North Carolina, along with Republican Senator Chuck Hagel of Nebraska, issued a joint statement of opposition to IMF gold sales. They noted that 36 of 41 nations identified by the IMF as heavily indebted poor countries are gold producers. Sales of some 300 tonnes of gold would no doubt depress prices, increasing the unemployment rate in those poorer countries.

So, if we were to go ahead with this idea of 'doing something' with IMF gold, we would relieve the debt burden of large international banks, and put tens of thousands of people in poor countries out of work.

We have to agree here with Jesse Helms, that stalwart friend of the Third World working class, that the proposed IMF gold sales are a terrible idea.

While on the subject of ill-advised sales of gold reserves, we like Ian McAvity's writing on June 16th about the first upcoming British gold auction, as quoted by Barron's 6/28/99: "The gold price is working very hard to make sure the British treasury get the price they deserve at their first auction July 6. I often use the analogy that markets specialize in identifying the pain thresholds of the players at key junctures, and the gold slump is probing to see if they'll back off (unlikely) and if not, to make sure the buyers get the best possible low price since the seller has motivated the event."


 

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