I HAVE BEEN WATING FOR GOLD TO BE FUN AGAIN!!!

Noah

The gold market is fun again

There have been some

surprising price movements

on the gold market lately.

The BBC's Rodney Smith

investigates.

Something's amiss in the

Kingdom of gold - again.

It looks on the face of it as

though at least one European

Central Bank has defied the

gold industry and pressed

ahead with sales of gold.

The Dutch

central bank

says it sold

three tonnes of

gold in the

week between

Christmas and

New Year. It

went largely

unnoticed in a

market that

was

concentrating like everyone

else on the possibility of

millennium bug damage.

Associated with this

information, the European

Central Bank published figures

showing that its gold reserves

at the end of December were

down 91m euros to 114.75bn

euros - due to gold sales by a

central bank.

So what was happening?

The Dutch point out that like

the Bank of England, they

have a standing plan to sell

gold. They are disposing of

100 tonnes by the end of

September, as part of an

overall plan to sell 300 tonnes

of gold from reserves over five

years.

The Swiss have a similar plan,

yet to be implemented.

The Dutch, though, have opted

not to sell at open auction like

the Bank of England, believing

that covert sales are less

destabilising to the market.

The Dutch also clarify that

their gold sales do not breach

the pact by 15 European

central banks. They told the

World Gold Council and the

gold producers in September,

not that they would abandon

gold sales, but that they would

limit disposals to 2,000 tonnes

over five years, and 400

tonnes a year.

Much more suspicious, and

there are few minds more

open to suspicion at present

than in the bullion market, are

those who believe that the

Dutch may have leased some

of this gold to big producers in

trouble back in October, after

persuasion by the Fed

Reserve.

That was when

the second

Bank of

England

quarterly sale

of 25 tonnes

was followed

by a sudden

surge in the

gold price,

leaving some

gold producers

that had sold

forward

dangerously

exposed.

The Bank of

England has been coming

under pressure for some

months from small gold

producers that believe it may

have been manipulating the

market to support some of the

big gold producers in trouble -

to the disadvantage, say they

small producers, of

themselves.

So far, replies by the Bank

have been opaque.

But the Bank may have to

take requests for greater

clarification more seriously

soon.

A North American group is

preparing what it warns will be

a landmark lawsuit - against

the US Federal Reserve Board,

allegedly for colluding with

other central banks in

supporting big gold producers

that were caught short in

October.

Suddenly, gold is fun again.

Watch this space.