|
|
Below is the text of a press release and attachment that deals with a
topic that you won't find much information about on the internet. I'm typing
it out so that it becomes available and searchable. Next week I'll discuss
what this means for the likelihood of gold confiscation occuring
in Australia. In the meantime, I'll leave you to ponder the fact that Part IV
of the Banking Act 1959 has only been "suspended".
PRESS RELEASE No 29
EMGARBO 6.00pm
STATEMENT BY THE TREASURER, THE HON PHILLIP LYNCH, M.P.
PRIVATE OWNERSHIP AND SALE OF GOLD BY AUSTRALIAN RESIDENTS
SUSPENSION OF PART IV OF THE BANKING ACT
The Treasurer, Mr Phillip Lyncy,
said today that Commonwealth restructions on the
freedom of Australian residents to own, buy and sell gold in Australia had
been removed.
He added that current restrictions on the purcahse
of gold coins had also been removed.
Australian residents could now export and import gold subject to normal
exchange control and customs procedures.
Mr Lynch pointed out that legislation existed in
some States to regulate gold buying and some dealings in gold.
The Treasurer was commenting on the effect of the suspension of Part IV of
the Banking Act 1959-1974 by His Excellency the Administrator in Council on
30 January.
In terms of this part of the Banking Act, gold, apart from wrought gold and
gold coins to a limited extent, had to be delivered to the Reserve Bank of
Australia within one month of its coming into a person's possession.
The legislation had restricted the sale of gold in Australia only to the
Reserve Bank or a person authorised by the bank.
It had also prohibited the export of gold without the Reserve Bank's
permission.
Mr Lynch said the reasons for these restrictions on
gold dealings by Australians no longer existed.
The role of gold in the international monetary system had declined
substantially in recent years.
Similar restraints were not placed by the Commonwealth on dealings in silver,
precious stones or other like forms of investment.
He noted that several other developed countries, including the United States
and Japan, had removed restrictions on the private ownership of, and dealings
in, gold.
A number of European countries also had no restrictions on gold holdings.
The Treasurer also pointed out that the Industries Assistance Commission, in
its report on the "Production of Gold" dated 5 Jun 1975, had
expressed doubts that the continued existence of the restrictions on gold
transactions in Australia served any useful purpose.
Submissions received from the Gold Producers' Association (GPA) had pressed
for removal of restrictions on gold marketing in Australia.
The Association welcomed the Government's decision to suspect Part IV of the
Banking Act.
The Reserve Bank had been holding discussions with the GPA, the Banks and
gold refiners to ensure that the marketing of Australia's gold was not
disrupted.
The Treasurer said that gold producers, for the time being, would still be
able to take their gold to banks or to refiners as they had done in the past.
However, if they wished they could now also sell their gold in other ways.
The industry would, in future, have greater flexibility in the disposal and
marketing of its output.
Mr Lynch mentioned that investment in gold was not
risk free and it involved significant costs such as storage, insurance and
assaying.
An outline of the history of gold controls in Australia is attached.
30 Jan 1976
CANBERRA ACT
ATTACHMENT TO PRESS RELEASE ON PRIVATE OWNERSHIP AND SALE OF GOLD BY
AUSTRALIAN RESIDENTS
GOLD CONTROLS IN AUSTRALIA - HISTORY
Australia, like most countries was on the Gold Standard before the First
World War. Currency notes were circulated alongside, and were freely
convertible into, gold coins. There were no restrictions on the import or
export of gold. Legislation existed in some States to protect gold miners and
to regulate the buying and smelting of gold.
The War disrupted the operations of the Gold Standard because of the physical
difficulties of shipping gold and the special problems involved in financing
the War effort. In 1915 Australia followed the United Kingdom in leaving the
Gold Standard. Gold exports except with the Treasurer's consent were
prohibited until Australia returned to the Gold Standard along with the UK in
1925.
In 1929 falling export prices and the cessation of long-term borrowing abroad
called for special measures to conserve Australia’s overseas funds. The
Commonwealth Bank Act in 1929 provided for the Bank (of which the Reserve
Bank of Australia is the legal successor) to requisition all Australian gold
in return for Australian notes. Formal action was never taken under this
legislation but it marked the beginning of the end of holding of gold by
banks and the public in Australia. In fact, there were no Commonwealth
restrictions on the ownership and sale of gold between 1925 and 1939. Banks
voluntarily accepted deposits with the Commonwealth Bank in return for their
gold.
The outbreak of World War II again called for special Commonwealth gold
controls. In 1939 regulations under the Defence Act
provided for the acquisition by the Commonwealth Bank of newly won and other
gold; regulations under the Customs Act prohibited the export of gold from
Australia without authority.
After the war these controls were continued in the Banking Act and with some
modifications were exercised by the Reserve Bank until today.
Until 1931 new-mined gold was added to the Commonwealth Bank’s stocks.
The Bank made gold available to meet domestic industrial demand; exports were
strictly controlled. The effect was to centralise
gold in the Commonwealth Bank’s hands as part of Australia’s
international liquidity.
In 1951 a premium over the official IMF price for gold emerged in world
markets. Arrangements were made for Australian producers to obtain this
premium for gold sold overseas. The Gold Producers’ Association was
formed specifically for this purpose. In practice the Commonwealth Bank
allowed the Association to repurchase the gold for sale overseas provided the
foreign exchange earnings were returned to Australia and thus added to our
international reserves. The Bank continued to retain sufficient gold to meet domestic
demand.
In the 1960’s the gold premium rose markedly. For a time the major
countries (not including Australia) sold gold to the free market to keep the
price down. This was abandoned in 1968 when the major central banks agreed
(Washington Agreement) not to add gold to their official reserves by way of
purchases from the private markets. Australia was not a party to the
Agreement but co-operated in it. Hence, the Reserve Bank held
Australia’s gold reserves virtually constant and although the legislation
required newly-won gold to be delivered to it, in practice the Bank returned
it to the producers. Gold producers were permitted to export gold and sell to
domestic industrial users. These arrangements continued until the suspension
of Part IV.
EFFECTS OF SUSPENDING COMMONWEALTH CONTROLS
One effect of suspension is that gold producers (and the Reserve Bank) are
freed from the requirement to pass newly-mined gold bank and forth between
them.
More importantly suspension widens the market for sales of gold by the
producers. Hitherto, they have been free to meet export demands but have been
limited domestically to sales for professional and trade purposes. Now, so
far as Commonwealth Law is concerned, they may sell to any person within or
outside Australia. Concurrently of course, the previous Commonwealth
restrictions on who may buy, hold and deal in gold are withdrawn. Although
imports were not controlled, imported gold was subject to delivery to the
Reserve Bank. Gold may now be imported free of this control.
Restrictions on the holdings of gold coins also have been withdrawn. Hitherto
holdings of coins with an aggregate gold content of more than $50 required
the prior consent of the Reserve Bank. The Bank administered their provision
so as to enable genuine collectors to improve their collections and to permit
dealers to meet the needs of genuine collectors.
While the Commonwealth restrictions have been removed there is still
legislation in some States dealing with gold. Essentially legislation in Victoria,
South Australia and Western Australia requires gold buyers or gold smelters
in those States to hold a State licence. Certain
classes of industrial users of gold are exempted from the licensing
provisions. It will, of course be up to individuals wishing to buy gold to
comply with State legislation.
MARKETING ARRANGEMENTS
The Reserve Bank has been in touch with the main parties concerned with the
handling of Australian gold to ensure a smooth transition to the new
situation. These parties are the representatives of the producers themselves
(the GPA), the four refiners (including the Perth Mint which is the major
refiner) and the Australian banks who have handled the transmission of much
of the gold from mine to refiner.
In practice, newly-won gold hitherto has been sent by the producers to the
refiners either direct or through one of the Banks. The refiner paid the
producer the official price less assay and refining costs; the refiner
received the official price for the gold from the Reserve Bank. Similarly,
the Reserve Bank informed the Gold Producers’ Association of the gold
available for sale and recouped from the Association the official price. The
GPA then sold the gold domestically or overseas at the ruling market price
and passed the premium over the official price back to the original
producers.
In future, the steps involving the Reserve Bank will be omitted, and, as a
technicality, the refiners and banks will not be agents of the Reserve Bank
in this connection. Otherwise, there will be no essential change in the
handling of newly-won gold because of suspension of Part IV. Eventually, of
course, the greater freedom in gold trading may lead to new practices.
CANBERRA ACT
20 January 1976
Bron Suchecki
Goldchat.blogspot.com
Bron Suchecki has worked in the precious metals
markets since 1994, when he joined the Perth Mint as an Administration
Officer in their Sydney retail outlet. In 1998 he moved to Perth to work in
the then fledgling Depository division. He has held a number of roles since then
in the treasury, risk and governance areas of the Mint.
All posts are Bron's personal opinion and not
endorsed by the Perth Mint in any way.
|
|
