The Bank of France and the French finance ministry yesterday agreed to sell up to 600 tonnes of gold reserves over the next five years and use the proceeds to help the country's deficit-ridden budget. At current prices, the sale of 600 tonnes would generate $8.6bn (€6.6bn, £4.6bn). "Extra revenues for the state resulting from this action will be dedicated ... to the reduction of public deficits and to the financing of long-term employment, particularly in the area of research," the central bank and finance ministry said in a joint statement.
They've been losing researchers and falling behind because they pay PhDs not much more than the 'artists' who live their lives off of the dole.
The proposed sale equates to almost 20 per cent of the 3,025 tonnes held by the central bank, the fourth largest holder of gold after the US, Germany and the International Monetary Fund. The decision comes seven months after France first indicated it might sell part of its gold reserves, some of which was accumulated during the Napoleonic era, and coincides with bullion hitting a 16-year high yesterday.
They'll need to do it slowly or the price will drop. But this also suggests they don't expect the Euro to fall anytime soon - i.e. buying at the top of the gold price & Euro value. That means their exports aren't going to pick up any time soon - especially to the US, but elsewhere due to price as well.
Of all the leading nations, France, which last sold gold in 1968, has long been seen as the most reluctant seller of bullion. The confirmation by the French central bank fills a significant part of the Central Bank Gold Agreement, which was renewed at the end of September for another five-year term by 15 central banks which agreed to sell collectively up to 500 tonnes a year under the new accord. Germany plans to sell up to 600 tonnes in coming years and the Netherlands plans to dispose of 165 tonnes. Switzerland said it would sell 130 tonnes, reducing its bullion holdings from 2,600 tonnes in 1996 to about 1,300 tonnes. This leaves another 1,000 tonnes that has still to be confirmed for sale under the agreement. Italy is the only signatory with significant gold reserves that has yet to confirm any sale plans. The Bank of France's gold holdings account for more than half of its reserves, compared with a eurozone average of about 40 per cent, according to the World Gold Council. Yesterday gold reached $447.35 a troy ounce, its highest level since July 1988. |