LETTERS TO THE EDITOR — Canada’s gold sales hurt CIS

We watch with dismay as the Canadian government continues to dump its gold reserves on the world market at a time when low metal prices are threatening the economic viability of numerous gold mines and northern communities (T.N.M., June 1/92).

To make matters worse, the Canadian gold sales come at a time when Canada, the U.S. and other G-7 countries are supposedly trying to bail out the former Soviet Union with massive International Monetary Fund loans. Contrary to the declared G-7 policy of providing aid to the new republics in the Commonwealth of Independent States (CIS), the Canadian gold sales have depressed prices and made it more difficult for the CIS gold mines to earn desperately needed hard currency.

If the G-7 countries truly wanted to assist Russia, they should declare a moratorium on central bank gold sales and allow the Russian economy to earn money the old fashioned way — by mining gold. This move alone will probably not save the Russian economy, but it would be a step in the right direction. Furthermore, it is a well known fact that at current gold prices about one-third of the South African mines are only marginally profitable and many of these mines will be forced to shut down if prices remain depressed. If this happens, thousands of black miners will be thrown out of work making it more difficult for both the African National Congress and the white minority government to negotiate a peaceful settlement.

Again, the G-7 countries could assist the peace process in South Africa by suspending central bank sales and allowing gold prices to stabilize at more profitable levels.

The bureaucrats in Ottawa seem to have overlooked these political issues in their rush to dump gold and reduce the Canadian budget deficit. Perhaps the mining industry should place these issues on the table while there is still some gold left in the vault.

If the U.S. government was to try this same trick — balancing the country’s deficit by selling gold — it would be game over.

C.M. Hamilton

Golden, Colo.