10 OCTOBER 1998, Page 28

Four-letter word

DON'T MENTION the G-word. The IMF may be running out of money, but there are some proprieties to be observed, and even if it is sitting on a vast horde of gold, it does not like to say so. Twenty years ago the IMF tried to replace gold with its own- brand currency, the Special Drawing Right. Although no one can say that this brand caught on, the IMF has forbidden itself by its own rules to manage or fix the price of gold, or even to buy it. So it just stays put on its 3,217 tons, which are in its books at US$35 an ounce, when the market price is now more like US$300. If the IMF had less sense of self-importance and more sense of self-preservation it would move these reserves into the front lines. The least it could do would be to put them in the bal- ance sheet at something like their market value. It would then go on to repeal its silly self-denying ordinance and declare itself free to deal in gold in its own best interests and those of its member countries. Their central banks and the IMF between them hold a quarter of the world's stocks of gold. Strengthening their reserves is the most natural and sensible response to the increasing dangers all around them. All official prejudices are against it, but never mind. Anyone who would rather have a Special Drawing Right than a nice solid portable ingot would always be welcome.