Nevada senator says sale of IMF gold reserves will not happen

Scott Sonner

Friday, June 18, 1999 | 6:03 a.m.

RENO, Nev. - Sen. Richard Bryan is assuring gold producers in Nevada and around the world that Congress will block the Clinton administration's attempt to sell off international gold reserves to help some debt-laden poor countries.

"It requires congressional approval. It ain't going to happen," Bryan, D-Nev., said today from Washington.

Bryan, a senior member of the Senate Finance Committee, outlined the dim prospects for the International Monetary Fund gold sale during a confirmation hearing Thursday for Lawrence Summers, the current deputy Treasury Secretary.

Bryan intends to support President Clinton nomination of Summers for the top treasury job, but vowed to block any effort to sell off 10 million ounces of IMF gold reserves.

The selloff would devastate world gold markets already hovering around 20-year lows, and probably hurt the heavily indebted countries the IMF is trying to help, he predicted.

Not to mention harm miners in Nevada, which is the world's No. 3 gold producer behind South Africa and Australia. The state had a record output of 8.86 million ounces last year, worth $2.6 billion. But low prices have led to layoffs.

"The recent drop in the price of gold has caused the layoff of over 1,000 mining employees in the state of Nevada alone," Bryan said.

Other high-powered Senate opponents of the IMF gold sale include Minority Leader Tom Daschle, D-S.D., and Frank Murkowski, R-Alaska, chairman of the Energy and Natural Resources Committee.

A White House spokeswoman said today there was no immediate response to Bryan's assurances that Congress would reject the sale.

The plan to sell the gold is intended to raise money for 41 poor countries included in the IMF's Heavily-Indebted Poor Countries Initiative (HIPC).

Those 41 countries have a combined debt of $220 billion, Bryan said. Of the 41, at least 14 produce a significant amount of gold. As a result in the decline in the price of gold, they have lost $150 million in export earnings, he said.

"Not only do you create turbulence in the domestic gold-producing market, you accomplish very, very little for the countries you are trying to help," Bryan said in the telephone interview today.

"I'm not unsympathetic to what they are trying to do. But in effect, you disrupt a whole industry in the process. It just doesn't make sense to me," he said.

Gold prices have been hovering the last week around $260 a troy ounce - the most depressed level since Jimmy Carter was in the White House - and closed Thursday at $259.30 on the New York Mercantile Exchange.

The metal had been trading for $270 just two weeks earlier.

Summers wouldn't say during the hearing Thursday whether the administration would reverse course on the proposed sale. But Bryan thinks he got the message.

"This is my third conversation with Summers," the senator said. "I just wanted to send a shot across the bow. This ain't going to happen."