Highlights:
GEOFF CANDY: Just coming back to the comments you were making about the Bank of International Settlements and the role of gold as a monetary instrument, the big issue recently that's been raised quite a lot is golds role as a tier one asset particularly with regards to a change in rules by the Basel III accord, how much of an effect is this likely to have on the gold market?
JULIAN PHILLIPS: I think it's going to have a dramatic effect and in fact it's one of the most important events that gold has seen since the Washington Agreement and you're going to see a new demand come into the market from commercial banks. After all gold as the head of the Bundesbank, Herr Weber described it, is the counter to the US dollar therefore it's a matter of prudence if commercial banks hold gold so that in the event of what we've seen so often now, the decay of paper assets on their balance sheets, then the rise in gold should act in some way to compensate it. It's the case of getting the right percentage, but it brings gold into commercial banks, a new demand on top of central bank demand. And with banks now, shall we say, agreeing to its importance then it is an important remonetisation step, and I think as I said earlier, it will act in support of the financial system. But the very fact that there is so little gold out there to be bought would necessitate a higher price, a very much higher price. So from the beginning of January next year when we're supposed to see implementation of these recommendations, we might see an entirely new force coming into the gold market, and one that could easily overwhelm private investors, could easily lead to a step as we saw in 1933 where the US confiscated its citizens gold and even when they were allowed to own gold again in 1974, the statement was made that owning gold was not a right, it was a privilege. Now if that's the authorities' attitude, then it puts very firmly on the table the spectre of confiscation sometime in the future. And that future might be much closer than we think. So investors have got to be very careful to act properly in terms of holding that gold in the right place, in the right way - not just in the right place...