Gold stocks ''got belted . . . The retreat in Australian gold stocks mirrored similardeclines in North America after the announcement by the UKTreasury. The announcement came after trading closed in AustraliaFriday on a day that saw the gold index rise 105.7 points, or 9.7percent, for its largest one-day gain since April 26, 1993. Therise was in response to comments by U.S. Federal Reserve ChairmanAlan Greenspan that prompted concern about inflation and droveinvestors to buy precious metals.
Gold is considered a store ofvalue during a period of inflation.
The UK Treasury's plan calls for about 125 metric tons ofgold to be sold over the next year, with Treasury holding fiveauctions for 25 metric tons each. Overall, the Bank of Englandgold reserves will drop from 715 tons to 300 tons over anunspecified number of years.''It's being fed into the market so as not to really disruptit,'' said Goode. He said the move appears to show Britishauthorities are ''lining themselves up to join the euro,'' theEuropean Union's common currency. Still, even with the drop, Australia's gold index is stillabove its 1,018.3 average over the past three months, and somehaven't given up on gold stocks as an investment.''We still believe that one has to have at least a marketweight exposure to gold stocks,'' said Paul Masi, head ofequities at ABN Amro in Sydney. He said he favors Newcrest aswell as Delta Gold NL.''The gold market has had to deal with these sorts ofcentral bank sales quite a few times,'' he said.