Beiträge von Schwabenpfeil

To put it bluntly, they would perpetuate a lie about what the true status of central bank gold really was. We know that to be the case as a result of the super-sleuthing of GATA Army's Andrew Hepburn of Canada.

Andrew asked the IMF the following:

Why does the IMF insist that members record swapped gold as an asset when a legal change in ownership has occurred?

The IMF answered:

"This is not correct: the IMF in fact recommends that swapped gold be excluded from reserve assets. (see Data Template on International Reserves and Foreign Currency Liquidity, Operational Guidelines, para. 72,)"

Yet, the following can be found on the central bank of The Philippines website:

"Beginning January 2000, in compliance with the requirements of the IMF's reserves and foreign currency liquidity template under the Special Data Dissemination Standard (SDDS), gold swaps undertaken by the BSP with non-central banks shall be treated as collateralized loan. Thus, gold under the swap arrangement remains to be part of reserves and a liability is deemed incurred corresponding to the proceeds of the swap."

The reaction of the gold price to the Washington Agreement was the most dramatic rise in the price of gold ever. That is not what any of the central bankers had in mind. They were just perturbed at the tactics of The Gold Cartel to suppress the gold price and wanted to do something about it. They had no intention of creating financial chaos.

How could they have been so surprised at what occurred? Easy. They were working off the inept gold industry gold loan numbers of less than 5,000 tonnes. The real number was more than double that at the time, which means the central banks had FAR less gold in their vaults than they realized.

The announcement set off a panic because the yearly supply/demand was running over 1600 tonnes (again, more than they realized) and there would be no way to hold the gold price down under the new agreement. The scheming Gold Cartel was in deep trouble. Something had to be done FAST. A solution had to be found that would allow the central banks and The Gold Cartel to calm down the market by feeding central bank gold into that market to satisfy the strong gold demand.

The problem for The Gold Cartel and the central banks was they needed to come up with a way to get the job done and not let the investment world realize the seriousness of the situation. Some sort of plan of deception had to be devised and one was - in Santiago, Chile in October 1999 by the IMF. The plan centered around IMF central bank members "swapping out" their gold, yet still accounting for that gold as a central bank gold asset.

The Bank of Italy Confirms Gold Cartel, IMF Gold Deception

The following documentation and statements were presented in Reg Howe's lawsuit filed in the District Court of Massachusetts against Defendants: Bank for International Settlements, Alan Greenspan, William J. McDonough, J.P. Morgan & Co. Inc., Chase Manhattan Corp., Citigroup, Inc., Goldman Sachs Group, Inc., Deutsche Bank AG and Lawrence H. Summers, Secretary of the Treasury.

*In July 1998, Fed Chairman Alan Greenspan, testifying before the House Banking Committee, stated: "Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise." This statement amounted to a declaration that the gold price had been and would continue to be controlled.

*According to reliable reports received by the plaintiff, this effort was later described by Edward A. J. George, Governor of the Bank of England and a director of the BIS, to Nicholas J. Morrell, Chief Executive of Lonmin Plc:

We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The U.S. Fed was very active in getting the gold price down. So was the U.K.

The "abyss" comment made by George and related by Morrell is no rumor monger talk. Morrell quoted George in front of three people that I know personally pursuant to the dramatic rise in the price of gold following the surprise Washington Agreement announced on September 26, 1999.

The evidence that the GATA Army has collected over the past year since Reg Howe filed his Complaint fully supports Morrell's comment that the central banks would do anything to "manage" the price of gold. Tragically, "anything" came to mean lying, deceiving and breaking various laws.

The essence of the Washington Agreement was that 15 European banks agreed to limit the sales of central bank gold to 400 tonnes per year for 5 years and not to increase their lending of gold over that time. The British and the Americans were not clued in prior to the announcement.

I will do the best I can to get right to the point on this dry subject for it is an ESSENTIAL to the GATA argument. GATA says the gold loans/swaps are 16,000 tonnes plus, meaning half the central bank gold is not there any more. The gold establishment now says they are less than 3500 tonnes out on loans, as 1500 tonnes have been returned by gold producers over the past three years.

GATA says the central banks, at the behest of The Gold Cartel and the IMF, are purposely deceiving the citizens and investing public of the world as to the true status of how much gold the central banks really have. The statement above that central banks may have double counted their true gold reserves is an admittance of what they have done.

Now to the evidence which proves THEY DID SO DELIBERATELY!! In the following piece I wrote in a similar state of rage years ago, it reveals central banks emailing GATA that the IMF instructed them to account for lent/swapped gold as reserves, while denying in writing to GATA that was the case! GATA’s Andrew Hepburn caught the IMF in a blatant lie. Touche:

December 18, 2001

http://www.gata.org/bofi.html

Statistical treatment

The statistical implications of gold swaps and gold loans/deposits are complex and have not been fully worked through. Work is still being undertaken by the Committee to address the implications. In particular, gold may be double counted with either a gold swap or gold loan/deposit if the party acquiring the gold were to on-sell it outright, because both the original owner and the outright purchaser would report ownership of the gold. In addition, there is the difficulty of having monetary gold being used in these transactions for purposes other than for reserve assets, and how (de)monetization would apply if the gold is sold for industrial purposes. Moreover, there is a proposal to treat (some) nonmonetary gold as a financial asset, rather than a commodity, and the outcome of that discussion may have further implications on the treatment of gold swaps and gold loans/deposits.

Finally, how the "fee" for gold swaps and gold loans/deposits should be treated has yet to be resolved. All these matters are being considered by the Committee and a report will be taken to the AEG in due course.

-END-

Gold swaps and Gold loans or deposits

Background

Gold swaps are usually undertaken between monetary authorities. The gold is exchanged for foreign exchange deposits (or other reserve assets) with an agreement that the transaction be unwound at an agreed future date, at an agreed price. The monetary authority acquiring the foreign exchange will pay interest on the foreign exchange received. Gold swaps are typically undertaken when the cash-taking monetary authority has need of foreign exchange but does not wish to sell outright its gold holdings. In that manner, gold is a leveraging device. Gold swaps sometimes involve transactions where one of the parties is not a monetary authority (usually it is another depository corporation). Gold swaps between monetary authorities do not usually involve the payment of margin.

Gold loans or deposits are undertaken by monetary authorities to obtain a non-holding gain return on gold which otherwise earns none. The gold is "lent to" (or "deposited with") a resident or nonresident financial institution (such as a bullion bank) or another party in the gold market with which the monetary authority has dealings and confidence and which is probably acting as an intermediary for a gold dealer or gold miner which has a temporary shortage of gold. The intermediary will, in turn, "lend" the gold to the dealer or miner – in effect, a change in ownership of nonmonetary gold then occurs. In return, the borrower may provide the monetary authorities with high quality collateral, usually securities (frequently, but not necessarily, substantially in excess of the value of the gold provided) but not cash, and will pay a "fee" thereby increasing the return from holding gold. The collateral does not change ownership and is treated as an off-balance sheet holding of the monetary authority8.

The nature of gold swaps and gold loans/deposits is similar to that of repos and securities lending in that the market risk toward the underlying asset (in this case, gold) remains with the original holder: if gold prices increase, the volume of gold returned is the same as that swapped, while the same value of the foreign exchange (as defined at the time of the initiation of the swap, plus any accrued interest) is returned.

Repurchase agreements, securities lending, gold swaps and gold loans:

An update

Prepared by the IMF
for the December 2004
Meeting of the Advisory Expert Group on National Accounts

This paper is for the information of the members of the Advisory Expert Group (AEG), regarding the currently accepted treatment of repurchase agreements, securities lending without cash collateral1, gold loans, and gold swaps2. The paper also sets out areas where work is continuing by the IMF Committee on Balance of Payments (Committee) and on which the Committee will provide further reports in due course.

This is the first time I have seen mention of selling IMF gold and then only buying back a portion. As far as I am concerned, Trevor Manuel is somewhat of a traitor and should be viewed as such by a faction in South Africa.

My assessment is not over the top and not without some degree of knowledge of what is going on down there. In early 2001 I toured the country to expose the gold price manipulation scandal, finding my way to Johannesburg, Cape Town, Durban and Pretoria. I met with the Minister of Mines, the number three executive at the South African Reserve Bank in Pretoria, the leading politician of a leading opposition party, etc. Then on May 10, 2001 we held our GATA African Gold Summit in Durban. Five sub-Saharan African gold producing nations were represented and it was prime time TV material two days running on SABC!

Without going into too many details at this point, it was very clear to me the power structure in SA is mainly interested in holding onto that power and to make sure its lines to THE MONEY was not interrupted. Bottom line: affronting The Gold Cartel was a no no. JP Morgan Chase is one especially powerful creature in that part of the world and the politicos, as well as most of the gold companies, are petrified of bucking them.

If that is what they want to do, that is their business. But to do it surreptitiously and in lying fashion is another. For a guy like Trevor Manuel to pontificate he is for gold sales to help the poor is the height of hypocrisy. He is nothing more than a mouthpiece for The Gold Cartel, as is England’s Mr. Bozo Brown.

OK, that is my rant. Now for some backup which bolsters where I am coming from. First an update from the IMF regarding gold loans/swaps, etc. For those not interested in all this intricacy and detail, go right to the BOLD in the update:

Reuters – January 18
SA backs UK IMF gold plan for debt relief

--------------------------------------------------------------------------------

The world's biggest gold producer, South Africa, backs a British proposal to use International Monetary Fund (IMF) gold reserves to write off the debts of poor countries, Finance Minister Trevor Manuel said yesterday.

Gordon Brown, Britain's finance minister, has suggested the IMF use some of its gold reserves to write off $12-billion of debt owed by the world's poorest countries as part of a wide-ranging plan for poverty relief.

Asked yesterday if he supported the proposal, Manuel said that revaluing of the IMF's gold was "very necessary".

So far, Brown has won little backing from global policymakers on his proposal for the IMF to support debt relief with a revaluation of its massive gold stocks - one of the biggest in the world - by selling and then buying back a portion.

South Africa's share of global output has slipped from 27% in 1993 to 15% in 2002, as high-grade deposits near the surface ran out of ore, hitting production. But it remains the top producer, and its backing for the plan is key.

Manuel was speaking on the sidelines of a two-day meeting of Britain's Commission for Africa, which aims to put poverty at the top of the global agenda as Britain takes the G-8 presidency.

He also said South Africa was not against selling the institution's gold reserves as long as this was managed so as to avoid swings in the price of the precious metal.

"We (as a global community) have done it before and can do it again, we shall do it again, but as a major gold producer we want to take part in the negotiations to ensure the price is managed."

Manuel said global sales of gold reserves by individual countries were inevitable given the diminished need to hold them, but sales by the IMF for debt relief should take priority.

Gold producers should expect gold sales, whether by the IMF for debt relief or by individual nations seeking to raise cash.

"As gold producers we have to be realistic, with so many countries sitting with huge gold reserves and these reserves not being used to defend exchange rates any longer as they were in the past, it's likely that they will sell," Manuel said.

"We would probably want to ask that if we could speed up debt relief and ensure that there is deeper debt relief for African countries, that the IMF sales get precedence over some of the other countries sales," he told reporters.

Brown's proposal is part of a wider plan to get donor countries to repatriate their share of World Bank and African Development Bank debts owed by developing countries, a process which Britain has already begun.

Under a 1971 agreement, most IMF gold is valued at just $40/oz to $50/oz, about a tenth of the current market price of more than $420/oz.

The IMF holds more than 100-million ounces of gold. Development agencies say revaluing the gold could raise some $30-billion for poor countries, although some nations are worried it could rattle markets. – Reuters

-END-

This guy doesn’t give a rat’s butt for the poor. If he did, he would be asking the richer nations to HOLD BACK on all gold sales. The price of gold would then soar and the economies in the sub-Saharan Africa would be enhanced enormously, especially as far as the poor are concerned. A soaring gold price, allowing substantially higher gold producer profitability, should put 100,000 miners back to work. Each miner supports 10 to 12 dependents. Then, you have the economic multiplier effect from this increased gold mining activity and so on and so on.

So how does South Africa respond? Their Finance Minister kowtows to the British clown like South Africa is an acquiescent colony of England:

That was today. On Friday this same bombastic bozo, the one who sold 400 tonnes of English citizens’ gold for $280 an ounce a few years ago, also said the following in this article:

U.K.'s Brown to Urge G-7 Ministers to Ease Poverty

Jan. 14 (Bloomberg) -- U.K. Chancellor of the Exchequer Gordon Brown will tell of ``shock'' and ``hope'' he experienced during a tour of Africa when he meets next month with finance ministers from the Group of Seven industrial nations and will urge them to alleviate poverty on the continent.

``It is right to tell the G-7 finance ministers and politicians that, as long as we fail to act, all those promises of help to parents and children we have made are not going to be redeemed,'' Brown told reporters traveling with him in an interview today in Dar Es Salaam, Tanzania. ``We have seen grinding, abject, relentless poverty and we have had a glimpse at the aching souls of the left-out millions.''….

Brown said much of his passion for helping the world's poor came from his father John and the tales of church missionaries he heard when growing up in Kircaldy, Scotland.

`Tragedy and Tribulations'

``My father was a Church of Scotland minister,'' Brown said. ``There were many contacts between the Church of Scotland and Africa and we repeatedly heard stories of people coming back from Africa. From a very, very early age you were hearing both the tragedy and tribulations of Africa.''

Brown said fatherhood had also encouraged him to seek greater aid and made him more emotional when he met young children in poverty. Brown has a 14-month old son and lost his first child, a daughter, after she died of a cerebral hemorrhage in Jan. 2002, 10 days after she was born.

``You're looking into the eyes of children all the time and you ask what their prospects are going to be,'' he said. ``It does influence you. It does influence you when you see the problems children face.''

-END-

The latest developments in this world sham/disgrace, which represents one of the most egregious examples of elitist hypocrisy of all time:

Use IMF gold to write off debt: Brown

January 17

By Lynn Bolin

UK Chancellor of the Exchequer Gordon Brown has voiced his support for plans for International Monetary Fund (IMF) gold reserves to be used to finance debt relief for the world's 70 poorest countries.

Addressing a gathering of 18 African finance ministers at the Commission for Africa meeting in Cape Town on Monday, Brown also called for the establishment of an international financing facility to generate an additional USD 50 billion annually in extra resources to help achieve the United Nations' (UN) Millennium Development Goals (MDG) by the target of 2015.

-END-

January 17 – Gold $422 – Silver $6.56

IMF Deceit, UK’s Brown A Hypocritical Farce, SA’s Manuel Nearly A Traitor

If we do not do what our duty tells us must be done, we will live in odium in the history of our progeny and our posterity... John Maxwell (Struggle For the Future; Jamaica Observer - Kingston, Jan 9, 2005)

GO GATA!!!

We know The Gold Cartel is in trouble. Whenever their available gold supply used to suppress the price has run way down, they rally their spokesmen to beat the drums for the IMF to sell gold to aid the poor. We have seen this modus operandi many times over the years.

I WOULD LIKE TO BRING THREE IMPORTANT FACTORS TO YOUR ATTENTION:

1. GREAT CRASH IN WORLD STOCK MARKET INDEXES - Once again I am waiting for the occurrence of a major crash of all markets, which is now not very far. Nature’s wave is gradually trying to grasp it and pull it down to where no one can come forward in its support. The crash will render a lot of people bankrupt and many will go into depression. Major banks and financial institutions as well as funds will close down overnight. People will queue out side of these luxurious offices and demand a refund of their hard earned money. The USA and EUROPE will be the worst hit by this crash. Though the Asian markets will also be severely affected, they will survive. Please note that my intention is not to scare anyone; I am merely exercising my duty to warn you.)

2. BURSTING OF THE HOUSING BUBBLE – A few years back I predicted a great rise in property prices in the USA and Britain. The period for thriving is now over and we are very close to the bursting of the housing bubble. After this, we shall not see the current valuation for next 29 years. This burst will have an immense negative impact on the banking/financial industry. Due to several reasons some of which I am mentioning in this letter, there will simply be no buyers for properties.

3. CRASH OF THE VALUE OF THE US DOLLAR AND EUROPEAN CURRENCIES - Any time from 2006, a big crash of the value of the US Dollar will occur. The value of money will plummet by up to 90%. This will be like a revolution in itself and it will be very interesting to watch what the role of the government and the Federal Reserve will be. The melt down in the value of various currencies will be a clear sign of inflation but the question is ‘who will have any buying power?’ The situation will be combination of inflation, deflation, recession and depression, a phenomenon I choose to call "slepplession".

4. NATURE’S UNREST AND AN UNCERTAIN WORLD SITUATION - We have seen the terror of nature unleashed by the recent tsunami. I have been warning of a natural catastrophe. For instance in 2002 World Prophecies, I stated that weather conditions in the whole world would change and disrupt people’s lives. Every so often, nature presents circumstances in which not much can be done. (It is like when a child spills coffee on his father’s suit. Since the deed is already done, there isn’t much that the father can do about it). Natural disasters will therefore continue to play a devastating role in world affairs. I don't want to scare people and I shall therefore not specifically name the region where the next major calamity will befall. Suffice is to say that by June 2005, two major world cities could be destroyed by nature.

5. CHINA COLLAPSING – Back in 1987 when I predicted the collapse and eventual disintegration of the USSR, people were extremely reluctant to believe me. Today, I predict a similarly astounding prospect. There will be a great social and economic collapse of China in the next 40 months. I know that many people will not believe me, but the first sign of this will come within a few months when China will announce an economic slow down as well as an internal financial crisis. The Chinese currency will drastically lose its value and they might introduce other currencies following the collapse of the banking or financial system. Countries banking a great deal on China may also face a crisis as a result of the Chinese breakdown.

I know that it is hard to believe what I am saying today but this has always been the case with my predictions. Time will be the only answer. It is not my intention to scare anybody but after reading this letter, one should remain very alert on any future planning. Due to their significance, I have been talking a lot concerning metals. The magnitude of their significance will be further demonstrated by many countries taking control over all mining areas as a result of the economic meltdown. The USA may attempt to gain control over the world’s gold production, but we shall see what happens then...maybe it will be a new war for acquiring gold and silver, as these will be the only valuable assets or currencies left following the economic meltdown and currency devaluation.

Thanks & God Bless,
Mahendra
http://www.MahendraProphesy.com
12 Jan 2005

From my friend Mahendra:

Dear Bill,
It is time to expound on a few IMPORTANT POINTS so that you may clear your doubts and have an indication of the direction in which to trade for the long term. Following are several issues which I believe will be helpful towards this end:

Many of my followers are a little confused in regard to my recent remarks about the strengthening of the US Dollar and weakness in metals. Let me confirm that the dollar will indeed gain, but this upsurge will not be sustained for long. In actual fact, the maximum period for which the dollar could stay up for three months and can remain stable for seven months, after which it will be relegated to the sidelines once more. Likewise, the Euro and the British Pound will also not perform well (I SEE THESE CURRENCIES COLLAPSING). It is therefore clear that GOLD WILL BE THE ONLY PHYSICAL ENTITY THAT SHALL TRIUMPH AGAINST THE CURRENCIES. Consequently, THERE IS NO NEED TO BUY THE US Dollar or sell the Euro: just buy the GOLD.

GOLD VS DOLLAR - It is quite apparent that the dollar factor was present in the last week of December. It is still there in the current month of January and it will in fact persist into the first two weeks of February as well. During this period, two powerful boxers will be squaring it out in the ring [US DOLLAR vs. GOLD]. Though gold may take some pretty strong punches at first, it will absorb the bashing quite easily and eventually emerge victorious by mid February. This remarkable resilience of gold is owing to the fact that compared to the dollar, it is the real thing and also part of nature. Very soon, the world shall witness the Dollar rising simultaneously with gold, though the major rally of gold prices will be from mid 2006. After this, gold will reach $1000.

In the preceding statement, I am talking about a strong dollar but it will still not remain strong in the long run. It may gain 12 to 15% against European currencies but then it will fall against Gold.

Silver will be the key investment area to watch for the next three years. I do not want to predict the price target but one thing is sure; its prices will surprise the investor community. Just be patient and wait for the right buying opportunity and don't short silver at all. Soon in the next few months silver will start trading above $10.

The gold shares continue to do their own disappearing act. Stale longs are exiting day after day. Not a good move in my book.

The XAU lost .87 to 93.25 and the HUI gave up 2.05 to 202.70.

These are not happy times for the gold and silver camp. However, the big picture has not changed one iota. The US deficit problems are worsening, the US economy looks very soft, the outlook for the dollar is grim, and Iraq is beyond a mess. Meanwhile, the demand for physical gold is soaring in India, Turkey, etc.

It won’t be long before gold takes out $430 again and silver blows through $7.

GATA BE IN IT TO WIN IT!

MIDAS

I am going to resonate what Rich C says below at the Vancouver gold conference a week Sunday, the 23rd, and then announce what GATA plans to do about it!!!!!!!

Bill,
For the life of me, I can not understand why the gold industry would affiliate themselves with the World Gold Council, who has allied with Jessica Cross. The poison spewed by her and cited in Midas 1/12/05 is incredulous! It is clearly an insight into their next wave of propaganda, which they hope will drive all investors away from anything gold, so they could buy it all for themselves.

Her comments concerning the present disdain for gold amongst the "ruling class", because the "bling-bling" and "chavs" adorn it in cheap nine carrot jewelry, reveal a great deal about the cartel's mindset. Terms such as "ruling class" and "elitist appeal" speak volumes about Jessica Cross's own superiority complex, which is evident throughout the plutocrats now manipulating the markets. In the past, these inflammatory comments might incite a revolution or result in a beheading. But, we are so much more civilized today then in Marie Antoinette's era. Too bad, because some public executions would do wonders for my outrage about the double standards we presently endure.

She is wrong of course! As one who has spent a great deal of time working amongst the culture of poverty, I can attest that icons adorned by those spirited folks enjoy enduring, great success; think BMW! As Bimmer became the vehicle of choice amongst gang bangin drug dealers, there was no exodus from that product line by the upper crust. Nor is that evident with Cadillac Escalades. These dirt bags will stoop below pond scum to denigrate gold, and the pathetic, aloof industry just yawns in their never ending detachment! Why can't they follow Wal-Mart's lead, and come out punching in their own defense? They are betraying the only people who support them, us precious metal mining investors, and when we walk away in disgust; they will learn about betrayal as the cartel drops them into oblivion. Go GATA!
Rich

This sort of NEW buying, if it is that, should have the gold camp jumping up and down for joy. Yet, during this period the price of gold has tanked despite this sizeable new buying. What is there to be joyous about and what good does this GLD do any of us? Not only has the gold price collapsed, it became unmoored from the weakness of the dollar during this same period. The euro is at the same price level it was when gold was trading $30 higher. AND, to boot, the gold shares have dropped 20% while GLD was loading the boat.

Meanwhile this huge GLD buying JUST HAPPENS to coincide with the covering of shorts by Goldman Sachs and friends. How is it that the specs are running away from their Comex positions in droves, yet we are led to believe other kind of specs are all running into GLD? Something is not right here, as oft-repeated by me. This GLD stinks to high heaven.

What makes NO SENSE:

Gold ETF continues to shine
Assets near $2B as fund adds 47 tonnes to holdings

By John Spence, CBS MarketWatch.com
Last Update: 2:52 PM ET Jan. 14, 2005

BOSTON (CBS.MW) -- After quickly gathering $1 billion in assets during its hot mid-November launch, an exchange-traded fund investing in gold bullion is set to double that total.

In just the first eight trading days of the new year, the StreetTracks Gold Trust (GLD: news, chart, profile) added 47 tonnes to its gold holdings, or about half of the gold accumulated by the ETF between its launch and the end of 2004, according to a research note released Thursday by Mitsui Global Precious Metals analyst Andy Smith.

In other words, so far in 2005 the gold ETF has added three times last year's total sales of U.S. Eagle gold coins, or more than 1,500 tons on an annualized basis.

Through Thursday, the gold ETF had about 142.7 tonnes of the precious metal and a net asset value of more than $1.9 billion and 45.9 million shares outstanding, according to the StreetTracks Gold Shares Web site…..

-END-

Holding dollars a loser:

From Reuters
Thursday, January 13, 2005
FRANKFURT -- The European Central Bank will post a 2004 budget loss for the second year in a row due to the U.S. dollar's decline against the euro, the ECB Vice President Lucas Papademos said on Thursday.

Papademos said at the ECB's news monthly conference that the bulk of the central bank's foreign exchange reserves are held in dollars. The U.S. currency has lost about 7 percent of its value against the euro in the past year.

He declined to reveal the exact size of ECB dollar holdings. The ECB will release its 2004 financial results in March.

The euro's rising external value over the course of 2004, particularly against the dollar, has raised expectations that the ECB's net losses have widened due to the declining euro value of the central bank's dollar-denominated assets and low domestic and foreign interest rates.

This development would be similar to 2003, when the ECB made a net loss of 477 million euros compared with a profit of 1.22 billion euros in 2002.

The euro's gain against the dollar in 2004 compared with a gain of over 20 percent the year before.

The central bank's policymaking Governing Council decided to offset the 2003 loss against the ECB's general reserve fund.

A net loss for the ECB in 2004 could have knock-on effects for the profits of national central banks in the euro area, which would have shared in any profit.

Germany's Bundesbank, for example, is expected to see almost no profit in 2004 and would therefore not be in a position to transfer some 2 billion euros that Finance
Minister Hans Eichel has penciled into this year's federal budget.

-END-