No Reason to Fear the IMF Gold Sales

Well, it looks like the IMF may finally unload that 403 tonnes of gold they've been talking about selling for the last couple years. It should raise a whopping $12 billion which, honestly, sounds like a drop in the bucket compared to the trillions that have been spent trying to fix the financial mess we are all in.

China may end up buying the whole thing. If I were them, I certainly would.
They've got about $2 trillion in U.S. dollar denominated assets about which they have become increasingly skeptical regarding its long-term value. Why not spend about half of one percent of their reserves on something that has intrinsic value?

It would be like having $1,000 and trying to decide if you should spend six dollars. That's about as close as you can get to a "no-brainer" in the world of central banking.

Comments

[The Goldfinger:]

The whole sale makes no sense whatsoever. IMF needs money? Print em! Why sell something of real value, especially in this environment? Especially - all of it. Well, it does make perfect sense if the the buyers are not disclosed, and the whole operation is a scam to mislead the investors and the public to hold off gold prices for some time.

Apr 03 05:40 PM

[Dave Wrixon:]

It would make sense for them to cash dollars in for Gold, but are you sure their gold reserves are that small?

Anyway, I wouldn't worry about it, Obama will have to sell off most of the US Gold just to pay the bills. That's if there really is anything left in Fort Knox?

Apr 03 05:58 PM

[DiggerUK:]

With the 2 Trillion or so dollars that the Chinese have collected they could buy the whole lot.

At today's prices the IMF stack is only worth around $11.5 billion+

www.imf.org/external/p...
www.lbma.org.uk/statis...

Apr 03 06:22 PM

[The Goldfinger:]

The Chinese will be happy to ditch soon-to-be useless paper for real stuff. The question is - who is stupid enough to sell it NOW?
And as of the Ft. Knox reserve, chances are - there is nothing left to pay off the bills. Bad for them.


On Apr 03 05:58 PM Dave Wrixon wrote:

> It would make sense for them to cash dollars in for Gold, but are
> you sure their gold reserves are that small?
>
> Anyway, I wouldn't worry about it, Obama will have to sell off most
> of the US Gold just to pay the bills. That's if there really is anything
> left in Fort Knox?

Apr 03 11:34 PM

[Conan the B...:]

To my knowledge IMF funding comes in the Form of Gold, not currencies. That funding is now going to Reach $1.1 Trillion that's $1,100,000,000,000 subtract 3 aughts for convenience(mine). Around One Billion oz. of gold. Where can that much be found? Only Central Banks whose leaders have All agreed to Fund it.

The worse it gets, and currencies are printed like there's no tommorow, the more Gold floods the markets, the Lower the perception of Inflation.

Just an opinion on how I would go about squelching future inflationary fears.

Apr 04 04:40 AM

[Conan the B...:]

Goldfinger: The IMF has done this for decades, Nothing new. The Gold will come from the Worlds Central Banks, also nothing new.

Apr 04 04:43 AM

[Chezfrederick:]

The Chinese are the logical buyers of this gold... This was my first reaction when I heard of the IMF's decision to sell their gold reserves. The question In my mind, is why would the IMF sell their gold especially after the G-20 commitment of a trillion dollar of new funding?, also why make such a public issue out of it? Was there a message in the announcement to inflence the price of gold in the market?

I am not sure if I am becoming a synic... but I find the price of gold is not behaving as one would expect in these economic times. Any thoughts?

Apr 04 07:27 AM

[GRAFFOL:]

I will try to summary my view. The whole financial system is on the verge of collapse because extreme exceses of the past 20 years agravated in the latest ten. The world economy and its installed production capacities of almost everything grew to an irreal and inflated state, based on the unrelenting growth of consumer indebtness and consumption. These phenomena has touched its outer limits and it´s contracting back to "real" levels of aggregate demand. I think they could be around 50 or 60 % of actual installed production potential capacities. The cars are an example.Meanwhile, every one in the world got absorved and involved into the global consumer game. Therefore all the political classes in the world have now a survival interest in not letting the established system fall to pieces and in maintaining the statu quo, more or less, if they can. Their seat of power is now highly compromised.That is why everything that affects the perception of reality is being illegally manipulated (news, markets, data,accounting rules, etc, etc) by the world establishment, including the price of gold, in an each time more desperate effort to avoid implosion. Information is never real as is always being adjusted to the down side, after a while. However economy realities can not not be stopped for ever. When the wall of the mascarade finally comes down, it will do it with a vengeance.

Apr 04 08:50 AM

[Vox Rationalis:]

What China should or should not do related to its holdings has absolutely nothing to do with the IMF selling gold. China could buy virtually any amount of gold it likes at any time - the market is quite liquid.

Apr 04 09:57 AM

[Vuke:]

Any amount? Really? And get it delivered?

Or are you referring to paper gold?


On Apr 04 09:57 AM Vox Rationalis (aka BS Detector) wrote:

>>> China could buy virtually
> any amount of gold it likes at any time - the market is quite liquid.<<<

Apr 04 10:17 AM

[Sandeep Daga:]

IMF selling, if it at all takes place, will certainly keep a cap on the prices. Why would China buy gold now, when it can buy it cheaper after Gold comes under selling pressure. Their strategic reserve plan for most of the commodities are quite thoughtful and they wait for good buying times.
In any case, the moot point is that Gold has not appreciated as much as one would expect in these times. I feel that the reason for this puzzling phenomenon lies in the amount of panic. Investors and savers would sleep with cash below thier mattresses if the panic is extreme in stead of buying any asset class. Additionally, process of develeraging required increased availability of cash or fiat currency; gold may not have helped in the process - so why buy it.
I follow a thumb rule for gold - buy in September, sell in March. Examine historical charts and you will find for yourself.

Apr 04 10:45 AM

[Vox Rationalis:]

Vuke wrote:

> Any amount? Really? And get it delivered? Or are you referring to paper gold?

Can you cite any instances where certificate holders were unable to take physical delivery?

Apr 04 11:54 AM

[Screwloose:]

True; gold usually does have it's seasonal peaks. However; this year is very different, it reached it's February highs without any net Indian "jewellery" consumption at all. [It's probably better to consider it fabricated investment buying; it's weight is just as important as it's appearance.]

The IMF's 403 tonnes is just a blip when compared to annual production and, currently high, scrap sales. The communique also speaks of "over 2 to 3 years" - that's if even one ounce of it ever reaches the open market. [Japan has just lent the IMF $100 billion - I wonder what the collateral was...?]

Still; it gives the shorts a nice hoax to peddle in their daily quest to shake a few more stop-loss triggers out of the futures market.

Apr 04 12:23 PM

[Fighting Yoda:]

In my understanding IMF member countries have the first right to buy gold from IMF sales. China, India and Russia are keen to buy. So unlikely any of the IMF sales will endup in the open market.

Apr 04 03:03 PM

[Vuke:]

On Apr 04 11:54 AM Vox Rationalis wrote:

> Can you cite any instances where certificate holders were unable to take physical delivery?<

Vox, let me refer you to another SA article. "NYSE Runs Out Of Gold Bars........"
seekingalpha.com/artic...
If every US citizen bought 1 oz. of gold the 8,000 T. US stockpile would be gone and more. There sure isn't much around.

Apr 04 03:33 PM

[Conan the B...:]

Vuke: "NYSE runs out of gold bars"

Eric A Ryan busted up that piece of fiction in the middle of the comment stream.

But since it was an unverified opinion instead of factual, its still there, snaring the unwary.

You do Due Diligence on investments, you should do DD on the Articles which guide you as well. imo

Apr 05 12:23 AM

[Peter Jackson:]

Why the recent obsession with gold? Gold creates no jobs, pays no dividends and stimulates no economic activity. After the days (in early 1980) when Bunker Hunt pushed the silver price to $50 per oonce and gold rocketed to nearly $900 per ounce, both metals fell to a small fraction of those prices.
For a quarter of a century the metal prices languished, but suddenly
gold is touted as a 'must have' asset. From what I see, world use of gold for jewellery and decorative purposes is diminishing rapidly. leaving the speculators to pick up the baton.
The purchase of gold is driven by greed and speculative forces, the same forces which caused the housing bubble. Can people not see this?

Peter Jackson.

Apr 05 05:44 PM

[sbb4th:]

And worthless paper dollars do?


On Apr 05 05:44 PM Peter Jackson wrote:

> Why the recent obsession with gold? Gold creates no jobs, pays no
> dividends and stimulates no economic activity. After the days (in
> early 1980) when Bunker Hunt pushed the silver price to $50 per oonce
> and gold rocketed to nearly $900 per ounce, both metals fell to a
> small fraction of those prices.
> For a quarter of a century the metal prices languished, but suddenly
>
> gold is touted as a 'must have' asset. From what I see, world use
> of gold for jewellery and decorative purposes is diminishing rapidly.
> leaving the speculators to pick up the baton.
> The purchase of gold is driven by greed and speculative forces, the
> same forces which caused the housing bubble. Can people not see this?
>
>
> Peter Jackson.

Apr 05 10:43 PM

[Allan Frain:]

Gordon Brown has shown the world the folly of Gold Sales in a world of competitive devaluation (yes it was going on then, but nothing like today). The IMF "rattles the saber" with respect to Gold Sales on a regular basis. As it sells, and if it sells, it will simply have less and less to rattle, until it has none at all. The big question is when the likes of China and Russia will exercise their publicly stated disdain for their USD holdings by buying gold. At that point it's game over on price suppression. Buy the dips and hold--physical gold is not subject to margin calls--there are trillions in latent inflation already committed.

Apr 06 08:23 AM

[Vox Rationalis:]

On Apr 04 03:33 PM Vuke wrote:

"If every US citizen bought 1 oz. of gold the 8,000 T. US stockpile would be gone and more. There sure isn't much around."

Not quite, but it's meaningless anyway. If every US citizen wanted to buy 1 share of Citigroup, the shortage would drive shares into the clouds. If every American decided that that he or she MUST eat a Big Mac today, every McDonald's would have lines out the door and would run out of pre-formed 1/10 lb. patties before the end of the lunch hour. So what?

Apr 06 12:18 PM