Dear Friend of GATA
Not much is more
disingenuous than central banking, as the Reuters story appended here
suggests. The story reports how the European Central Bank sold gold in 2008
and purchased U.S. dollars with the proceeds, even as the story also reports
that the bank "confirmed that it had not intervened in currency markets
But of course
selling gold and buying dollars are by definition interventions in the
currency markets. Indeed, the very purpose of central banking is market
intervention -- to prevent free markets alone from setting the value of
financial instruments, particularly currencies and government bonds. When a
central bank can assert that its actions in the markets don't constitute
intervention and have the assertion reported without the least questioning,
you may see how inadequate most financial market reporting is.
Gold Anti-Trust Action Committee Inc.
* * *
ECB Invested 2008 Gold Sales Proceeds in U.S.
By Sakari Suoninen
Tuesday, April 21, 2009
-- The European Central Bank said on Tuesday it used proceeds from gold sales
to boost its U.S. dollar reserves in 2008, although dollar holdings fell as a
proportion of overall currency reserves.
Its foreign currency
portfolio was worth 38.5 billion euros at the end
of last year compared with 32.1 billion euros at
the end of 2007, the ECB said in its annual report.
The share of the
currency portfolio denominated in dollars fell to 77.5 percent from 79.7
percent in 2007, while the yen's share rose to 22.5 percent from 20.3 percent
in 2007, boosted by the stronger Japanese currency.
The overall increase
in reserves was funded by the sales of 30 tonnes of gold, which were
announced in 2008. "The proceeds of the gold sales were added to the
U.S. dollar portfolio," it said in its annual report.
The yen appreciated
30.8 percent and the dollar went up 5.8 percent against the euro in 2008, the
ECB said. The euro also weakened 11.4 percent against the Chinese yuan, and 10.2 percent against the Swiss franc.
The ECB also
confirmed it had not intervened in currency markets in 2008. The last time it intervened was in 2000.
The overall net
value of the ECB's foreign reserves rose to 49.5
billion euros at the end of 2008 from 42.8 billion
at the end of 2007, due to portfolio management and the depreciation of the
euro against the dollar and the yen.
Gold and special
drawing rights issued by the International Monetary Fund accounted for 11
billion euros of net foreign reserves, up from 10.7
billion euros in 2007 due to a 2.6 percent rise in
the value of both gold and SDRs versus the euro.
China suggested in March that the dollar could eventually
be replaced as the world's main reserve currency by the IMF's SDR.
for the management of the ECB's foreign reserves
are, in order of importance, liquidity, security and return," the annual
The ECB said it had
no losses in foreign reserves as a result of default of counterparties.
Secretary / Treasurer
Gold Anti-Trust Action Committee
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