India's Gold Grab Boosts Metal's Price

Yesterday's theory of a "limit up" of $50 a month for gold gained more credibility during Day 2 of November when the price of the yellow metal given a shot in the arm by the announcement from the IMF that they had sold 200 tonnes of gold to the Reserve Bank of India - about half of its entire planned sales that have been talked about for years, but only recently approved.

Commodity Online, which originates in India, provided the following commentary in an effort to explain why India acted first - before China - to grab this metal.

Dubai-based bullion analyst Mark Robison says everyone expected China to buy the IMF gold in the first phase. “It is a surprise that India has jumped in the first place to purchase the IMF gold. India is the largest marketplace for gold in the world. I think by buying IMF gold, India has shown increased interest in diversifying out of US assets as the dollar loses value against other currencies,” Robison told Commodity Online.
...
"I strongly welcome this transaction with the Reserve Bank of India," the IMF's managing director, Dominique Strauss-Kahn, said in a statement.

"This transaction is an important step toward achieving the objectives of the IMF's limited gold sales programme, which are to help put the fund's finances on a sound long-term footing and enable us to step up much-needed concessional lending to the poorest countries"

Yeah, right.

Had Strauss-Kahn known that this sale would make the gold price shoot up $20 an ounce, now looking like it's bent on hitting $1,100, maybe he'd have kept the news to himself.

Central banks around the world that are sooooo anxious to exchange their paper money for dumb old gold bars must make other central banks around the world wonder about the paper money that they hold.

While some economists (mostly in the West) still think of the yellow metal as a "barbarous relic", others (mostly in Asia) certainly do not.

Commodity Online also filed this report about China perhaps being next to belly-up to the IMF gold bar (pun intended).

With India and China emerging as the leading economies to beat recession in the world, Indian central bank’s decision to buy 200 tonnes of International Monetary Fund’s gold at $6.7 billion has added to the country’s power to impact the global market.

And, if Reserve Bank of India bagged the 200 tonnes now speculation is rife over which bank will pick up the remaining 200 tonnes the IMF wants to sell in the market.

The first contender now is China, which has been stockpiling gold for quite sometime now. China is slowly shifting its focus from dollar to gold and it now wants more gold reserves in place of its foreign reserves in dollars.

It wouldn't be surprising to hear that central bankers in China are now fuming at India having beaten them to the punch.

Now, there are only 203.3 tonnes of IMF gold left and the price has just risen by a couple percent - if China does snap up the balance quickly, all parties would be well advised to keep that news to themselves for a while, lest the gold price quickly get out of hand.

Here's an update to yesterday's "limit up" graphic:
We're already about two-thirds of the way there after just two days...

Comments

[yellowhoard:]

I trust our leaders to do the right thing!

We need to focus on what we do and buy more golf carts.

Golf carts, and the subsidies on them, are what make America stand proudly alone in the world.

Let the Chinese and the Indians buy the IMF gold, which used to be our gold, we're only a chip shot away from a golf cart in every garage!

Nov 03 04:29 PM

[Albertarocks:]

That story was so off the wall, I emailed it to my daughter to read because she didn't believe me. And to top it off, there's no limit. Anybody can pick up as many as they want. How about 8? One for each day of the week.

Nov 03 04:39 PM

[tripleblack:]

LOL, OK, just to be precise, you are talking about carts, nor karats, right Rocks?

I guess China will get the rest, and the IMF will "spread the wealth around" in "concessional" lending to po' folks (or their friendly neighborhood dictators, whichever bumps in line first).

I think they got the word wrong, it should read "confessional"...


On Nov 03 04:39 PM Albertarocks wrote:

> That story was so off the wall, I emailed it to my daughter to read
> because she didn't believe me. And to top it off, there's no limit.
> Anybody can pick up as many as they want. How about 8? One for each
> day of the week.

Nov 03 05:06 PM

[DiggerUK:]

After years of never having the manipulation theory put to a real test, the much talked over IMF gold sales begin.
The first half goes to India, and the price of gold rises.

Be interesting to know who gets the second half of the gold tranche.
Japan ? Saudi ? Australia ? Brazil ? Iceland ?

GATA headquarters must look like the HQ of the party that just lost the election when the final vote has been counted on election night.
Today was the day manipulation theorists lost the argument for good.

Nov 03 05:16 PM

[rcro:]

Heh, heh, heh. That IMF really pilled one over on India. Convinced them to take that disgusting barbaric relic off its hand. Next, maybe they can convince China to take the other half. Pretty soon, no nation will have any gold and they can use the vaults and storage space to store beanie babies or some other purpose that is really important. Everybody knows --that is to say they have been convinced by the government--that gold is no longer fashionable. Nobody wants that old antique stuff-not Americans anyway.. All the other nations have sold some or maybe most of their gold. It must be embarrassing for the US to admit the have any of the filthy stuff. especially when you consider the US probably doesn't have hardly any left since they have leased much --if not most--of it out to their banker buddies. It would be a mistake for public office holders to admit their campaign contributors got it; It would be better if they just told people that they sold it for around $300 an ounce ---just like Gordon Brown--because it was patriotic and in the best interests of the people to do so. Of course, they wouldn't have to tell anyone the money they got from the "sale" was used for foreign aid or such other essential purpose. It is surprising how many people don't know that "campaign contributions" do not have to be spent on election campaigns, but may be used for personal needs by those standing for election to public office. .. Since most countries have convinced their inhabitants that paper money is superior to gold and silver, I doubt that any one would give it more than a fleeting thought. Now, if the price of gold gets to about $5000 an ounce that would stimulate a few brain cells wouldn't it.? For years, my brother-in-law has repeatedly taken great pleasure in asking me if I thought gold would ever reach $850 again. It seems one of his friends bought near the top when gold topped a few years ago. He was certain, the man would have to take a huge loss. I think he thought I would have to take a big loss too because I have gobs of the stuff. I am old and lived through the 30's depression. I like old stuff--I don't care if it is fashionable or not. In fact, I have so much of the stuff, I have become quite wealthy. I think that makes him uncomfortable because he is highly competitive and does not like to be bested. I can hardly wait until the end of the year when gold gets to $1300. Just imagine how high it will go when people panic into buying gold. $5000? $10000? Who knows. I haven't seen my brother-in-law since last autumn. His wife told me his IRA was down about 40% then. I wonder how much it was down in March. I also wonder how much it will be down 2 years from now. It will be interesting to see if wave C down does start on Nov. 9.

Nov 03 09:39 PM

[MarvinMBA:]

I think that silver is going to make some serious upward moves...MarvinMBA

Nov 04 12:44 AM

[Mad Hedge F...:]

bnk ) News broke this morning that, out of the blue, the Reserve Bank of India bought 200 metric tonnes of gold from the IMF for a handy $6.8 billion. The news set the gold market on fire, boosting the December futures $40 to an all time high of $1,088. It is the largest transaction in the barbaric relic since the Alaric’s Visigoths sacked Rome in 410 AD. It has been public knowledge for some time that the IMF was looking to unload 403 tonnes of the yellow metal in order to fund lending to poor countries. Many traders say this threatening overhang is why gold failed to definitively break out to the upside this year, despite six attempts. The expectation was that China would take this hoard as part of a broader diversification away from the dollar. Bringing India into the fray, which had no prior history of stockpiling gold, is a whole new plate of basmati rice. Not only does this raise the prospect of a bidding war with China for more gold reserves, other cash rich emerging market central banks are likely to join the mosh pit as well, no doubt panicked by the ominously rising whirr of printing presses in the developed countries. My short term goal for gold was $1,200, but I now have to raise that to the $1,300 favored by some chartists in view of the new dynamics. If you want to see my long term target, take a look at the chart below, which has gold zeroing in on its inflation adjusted all time high of $2,358. For those who prefer holding the barbaric relic of the physical kind, visit the tightest spreads in town on American Eagles and bullion at www.millenniummetals.net/ . And while you’re there, sign up for their free research product on precious metals.

Nov 04 05:58 AM

[Zmartmoney:]

I always like starting my day with a good laugh, and it appears I picked the right spot to start reading...what a hoot - late night tv writers will start coming by to get hints for improving their game. Lord knows they need to. Thanks to Yellowhoard for starting things off right!!

Nov 04 10:24 AM

[5142152-337:]

YH: I'd give you a hug and a kiss, but I don't know you that well!

Nov 04 12:43 PM

[History Buf...:]

Digger, by your logic Pearl Harbor never happened because Japan surrendered to the Allies on August 15, 1945. Excuse me?


On Nov 03 05:16 PM DiggerUK wrote:

> After years of never having the manipulation theory put to a real
> test, the much talked over IMF gold sales begin.
> The first half goes to India, and the price of gold rises.
>
> Be interesting to know who gets the second half of the gold tranche.
>
> Japan ? Saudi ? Australia ? Brazil ? Iceland ?
>
> GATA headquarters must look like the HQ of the party that just lost
> the election when the final vote has been counted on election night.
>
> Today was the day manipulation theorists lost the argument for good.

Nov 04 02:25 PM