Bank of England Gold Auctions
The Last Auction
The last auction in the second and final series took place on Tuesday 5th March 2002.
We believe that as central bank sales come to an end, this will remove some of the downward pressure on gold prices, and therefore probably will encourage increased investment buying of gold, leading to higher prices in the mid to long term.
Results
The allotment price was $296.50, and the amount of gold on offer was oversubscribed 3.7 times.
Our Opinion
The World Gold Council has heavily criticised the British Government and the Bank of England for the way it has handled its gold sales programme. We disagreed with the WGC criticism, as we believe that the British move to reduce the proportion of gold in its reserves was in line with modern monetary thinking. Of course it remains to be seem whether this is merely a fashion which will in time be revealed to be flawed.
Market Effect
It is likely that the regular large amounts of gold which have been placed onto the open markets by this and other Central Bank sales will have had a depressing effect on the market price for a number of years. The current British auction program is for six sales each of 20 tonnes. The previous auction round was for 150 tonnes.
Swiss National Bank Gold Sales
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