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Gold Tumbles As IMF Reaffirms Plan To Sell 191.3 Metric Tons Of Gold Over Time in Phased "On-Market" Gold Sales

Tyler Durden's picture




 

The IMF just announced it would resume selling the balance of its preapproved for sale gold, of which 191.3 tons remains. The sales would be in a phased manner over time to avoid disrupting the gold markets. This is not major news as this is inline with the IMF's September 2009 announcement to sell 403.3 metric tons of gold. As is well known the IMF has already sold 212 metric tons. Nonetheless, gold is selling off after hours. As gold was bought via dollar shorts, the current unwind is sending the dollar proportionately higher.

 

From Dow Jones:

WASHINGTON (Dow Jones)--The International Monetary Fund said Wednesday it will soon begin selling to the market the remaining 191.3 metric tons of gold  it has slated for release, though the sales will be conducted in phases to avoid disrupting markets.

The sale of gold, currently worth nearly $6.9 billion, will begin "shortly," the fund said in a brief statement.

"In accordance with the priority of avoiding disruption of the gold market, the on-market sales will be conducted in a phased manner over time," the IMF said.

The IMF noted that central banks in Europe have said they can accommodate the fund's gold as part of their scheduled sales in the Central Bank Gold Agreement.

The IMF board approved sales of 403.3 metric tons of gold in September to create a more stable income model and boost support for low-income countries.  About 212 metric tons have already been sold off-market to central banks of India, Mauritius and Sri Lanka.

The IMF didn't rule out further off-market sales, which would reduce the amount sold to the market.

Full press release text:

IMF to Begin On-Market Sales of Gold

Press Release No. 10/44
February 17, 2010

The International Monetary Fund (IMF) today announced that it will
shortly initiate the on-market phase of its gold sales program. This is
the second phase of the total sale of 403.3 metric tons approved by the
Executive Board in September 2009 (see Press Release No. 09/310).
The first phase was set aside exclusively for off-market sales to
official holders. A total of 212 metric tons was sold during this
phase, comprising sales to the Reserve Bank of India see Press Release No. 09/381), the Bank of Mauritius (see Press Release No. 09/413), and the Central Bank of Sri Lanka (see Press Release No. 09/431).

The total amount remaining to be sold is 191.3 metric tons. In
accordance with the priority of avoiding disruption of the gold market,
the on-market sales will be conducted in a phased manner over time.
This follows the approach adopted successfully by the central banks
participating in the Central Bank Gold Agreement. Participants in the
agreement have noted that the Fund’s sales can be accommodated under
the agreed ceilings of 400 tons annually and 2,000 tons in total during
the five years starting on September 27, 2009. The initiation of
on-market sales does not preclude further off-market gold sales
directly to interested central banks or other official holders. Such
sales would reduce the amount of gold to be sold on the market.

The IMF will continue to provide regular updates on progress with the gold sales through its normal reporting channels.

Useful links:

Factsheet: Gold in the IMF:
http://www.imf.org/external/np/exr/facts/gold.htm

IMF Survey: Board Backs Plan to Adopt New Income Model for IMF:
http://www.imf.org/external/pubs/ft/survey/so/2008/NEW040708A.htm

Factsheet: IMF Support for Low Income Countries:
http://www.imf.org/external/np/exr/facts/poor.htm

Central Bank Gold Agreement–Joint Statement on Gold:
http://www.ecb.int/press/pr/date/2009/html/pr090807.en.html

 

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Thu, 02/18/2010 - 00:01 | 235074 asteroid
asteroid's picture

I'm wondering what kind of gold are they going to sell?  Would that be real gold, or gold-plated tungsten?

Buyer--beware!

 

Thu, 02/18/2010 - 00:18 | 235082 Tethys
Tethys's picture

In related news -

South Carolina Rep. Mike Pitts has introduced legislation that would mandate that gold and silver coins replace federal currency as legal tender in his state. 

http://www.cbsnews.com/blogs/2010/02/17/politics/politicalhotsheet/entry...

Thu, 02/18/2010 - 02:26 | 235158 merehuman
merehuman's picture

 Applause to that.

Thu, 02/18/2010 - 03:13 | 235188 faustian bargain
faustian bargain's picture

worth keeping an eye on developments, but I'm not holding my breath.

Thu, 02/18/2010 - 00:28 | 235089 Mr. Mandelbrot
Mr. Mandelbrot's picture

My favorite aspect of gold is its ability to function "off the grid."  I buy it with cash without sales tax anonymously.  I can sell it for cash anonymously while taking a much smaller haircut than the capital gains taxes I would have paid on paper investments.  My descendants will not be paying estate taxes when they receive the combination to my vaults upon death, etc., etc.  Why aren't more of us using these tactics?  Is it any wonder we've been weened off of intrinsically valuable commodity monies and hooked on enslaving paper?

Thu, 02/18/2010 - 01:22 | 235117 Burnbright
Burnbright's picture

I agree, people really don't understand the benifits to using just gold or silver. They are freaking huge! Little risk and huge reward its win win and no one seems to care for some reason.

Thu, 02/18/2010 - 02:40 | 235171 faustian bargain
faustian bargain's picture

It's because it's too "different" and they didn't think of it first, therefore it's stupid to them. Ego.

Thu, 02/18/2010 - 00:29 | 235090 Anonymous
Anonymous's picture

Gold Anti-Trust Action (GATA) Committee Comments on Alleged Gold Sale Announcement

Why the IMF's supposed gold sales don't mean much

Submitted by cpowell on 05:24PM ET Wednesday, February 17, 2010. Section: Daily Dispatches
8:40p ET Wednesday, February 17, 2010

Dear Friend of GATA and Gold:

Below is the press release issued this evening by the International Monetary Fund announcing that it "shortly" will sell 191 tonnes of gold on general markets, unlike the 212 tonnes it claimed to sell last year directly to India, Sri Lanka, and Mauritius. While the gold price quickly fell $7 or so on the news, there are a few things to remember.

1) The IMF really doesn't have any gold, just a tenuous claim on the national gold reserves of its members. Where the IMF's supposed gold is kept is a state secret. So is the location of the gold the IMF supposedly recently sold to India, Sri Lanka, and Mauritius. So are the gold bar numbers. There is no public evidence that the IMF's gold even exists, no public evidence that last year's supposed IMF gold sales were anything more than bookkeeping entries. Indeed, those sales may have been nothing more than a few press releases. See what is, as far as GATA knows, the only attempt to address these issues journalistically with the IMF:

http://www.gata.org/node/8052

2) In its announcement the IMF says again that its supposed gold sales will fit comfortably within the annual quotas set by the Central Bank Gold Agreement. That's because the signatories to that agreement -- the Western European central banks -- stopped selling gold last year. Since the Western European central banks are not selling, the IMF gold sales are a hint that any gold now being dishoarded is coming straight from U.S. gold reserves. The IMF is headquartered in Washington, the United States has a de-facto veto on its operations, and there can be little doubt anymore that the United States is operating surreptitiously in the gold market, the Federal Reserve having acknowledged last September that it has at least contemplated such intervention in the gold market via gold swap agreements with foreign banks:

http://www.gata.org/node/8192

3) The rationale for the IMF's supposed gold sales -- to raise cash for its operations helping (that is, expropriating) poor countries -- is ridiculous on its face. The IMF is the issuer and custodian of the world's supreme money, Special Drawing Rights (SDRs), and in just one afternoon last year the IMF conjured $250 billion of them into existence:

http://www.imf.org/external/np/sec/pr/2009/pr09264.htm

By comparison, the first 212 tonnes of gold supposedly sold by the IMF last year raised only $7 billion, or less than 3 percent of the money created by mere conjuring:

http://www.bloomberg.com/apps/news?pid=20601087&sid=alOoEXinykfo&pos=5

In such circumstances gold is not sold to "raise money"; it is sold to suppress the price of a currency that competes with fiat currencies and, when traded freely, is a measure of their debasement.

4) That is why, as Jim Sinclair and others have noted many times, official gold sales correspond with rising gold prices, not falling gold prices. Official sales are manifestations of central banking's controlled retreat when money and credit creation have gotten out of hand relative to the gold supply and gold's price is threatening to explode and make a scene very embarrassing to governments and central banks. The last decade has been a time of massive Western central bank gold dishoarding, probably a time of cash settlement of central bank gold leases that could not be settled by recovery of the borrowed metal without exploding the gold price, and during this time gold has risen from $250 to more than $1,000 per ounce:

http://www.kitco.com/charts/popup/au3650nyb.html

If central banks were not on the desperate defensive with gold, how, amid all that official gold selling, could the gold price have quadrupled?

No doubt some gold holders and traders will be duly frightened out of their gold by the IMF's latest announcement, and that will be discouraging for those who remain gold investors. But if this gold "sale" turns out like the others over the last 10 years, before long the gold price will be higher still.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Thu, 02/18/2010 - 00:39 | 235093 johngaltfla
johngaltfla's picture

ChiComs say:

 

Thank you dumbasses.

Thu, 02/18/2010 - 01:07 | 235106 chindit13
chindit13's picture

I'm always late to these parties, given the time difference and my occasional need for sleep, but I will repeat, or rather consolidate, a couple of anecdotal bits relating to gold in Asia:

---at the moment, Chinese would rather buy property at an all-time high than gold ten percent off of its ATH...go figure

---Chinese who have "arrived" are wont to show off...one can wear $100K worth of jade or diamonds more easily than anyone, save for a buffed gangsta rapper, can wear $100K worth of gold, at least at this date...thus many individual Chinese are dumping gold and buying jade and diamonds

---gold production in Western China and Eastern Burma is up substantially in the last year, as $1000/oz resulted in large population shifts of the modern day equivalent of the '49ers...and neither China nor Burma feel compelled to report their production to the World Gold Council

---gold is not "mystical" in Asia, this myth resides in the minds of Westerners who are somewhat inexperienced with the Inscrutable East...gold is merely a store of value when people (previously) did not trust banks and had limited access to purchasing land...the gold is traded for paper as needed to buy the necessities of life, and during flush times the excess paper is turned back into gold...today is not a flush time, despite the headlines to the contrary

Thu, 02/18/2010 - 01:11 | 235110 monopoly
monopoly's picture

This is such a bunch of crap. There is nothing new here. Trying to upset the market, we are way past that. Is there an intelligent govt. anywhere on this planet.  Sure maybe for a day or two. I will be buying more gold by the end of the day tomorrow and adding to AEM. What an earnings report. Wow.

Thu, 02/18/2010 - 06:46 | 235236 Anonymous
Anonymous's picture

Agnico-Eagle are the next homestake mining.

Look in the report and see that potential.
There is not any other miner with the same relative performance developping.

AEM compares with nothing else in the industry !

Thu, 02/18/2010 - 01:19 | 235114 Anonymous
Anonymous's picture

Thank you #234958
These gold sales are bs. It is exactly like the London Pool in the 1960's. Central Banks are painting the tape. Book entries or not, they are just selling gold to each other as a cartel to try to keep prices low. It is pure bs. Only retards would sell their physical gold right now. Read history and stop looking at your trading screens.

Thu, 02/18/2010 - 01:54 | 235140 order6102
order6102's picture

950 there we come!

Thu, 02/18/2010 - 02:28 | 235160 Hephasteus
Hephasteus's picture

Easier to move heaven and earth than to break through 1050. Easier to remodel heaven and earth after moving it than to break through 980.

Thu, 02/18/2010 - 03:50 | 235202 order6102
order6102's picture

thats exactly why its going to happened, bcs nobody expects it! 950 gold, 10 silver, 1 copper 30 oil... who can expect it? How about 50bps on 10y bonds? did somone expected it? Been there seen it, got t-shirt...

Thu, 02/18/2010 - 07:10 | 235247 Hephasteus
Hephasteus's picture

Shit in one hand and wish in the other and see which one fills up faster.

Thu, 02/18/2010 - 10:22 | 235313 Stuart
Stuart's picture

NOT todayyyyyyy!!!

Thu, 02/18/2010 - 02:45 | 235173 Harbourcity
Harbourcity's picture

None of this shit matters.  Smoke and mirrors.  If you`re in gold, you`re in gold long-term.  The real pay off won`t happen until it all plays out and there`s more this bs to come.  Don`t complain, it`s giving you time to buy more.  You think a glut in gold... what the hell do you call this fiat bullshit.

 

Thu, 02/18/2010 - 02:47 | 235176 Harbourcity
Harbourcity's picture

PS would you buy any IMF gold if the last lot you got was full of Tungsten.  No wonder China is digging up their own.

 

Thu, 02/18/2010 - 03:10 | 235186 Gunther
Gunther's picture

If the anounced sale of 200 tons gold brings the price from ~1114$ to ~1098$ the market is strong. That move is only noise.

 

Thu, 02/18/2010 - 03:20 | 235189 Rick64
Rick64's picture

The IMF is a sham, their ulterior motives have nothing to do with helping or bailing out countries, and the CEO is the U.S. If Soros is buying gold that says something. Actions speak louder than words.

Thu, 02/18/2010 - 03:46 | 235200 order6102
order6102's picture

its amazing how much excitement yellow shiny stuff creates here! Whatever... They have to take all 75mg of Astatine from my cold dead hand...

Thu, 02/18/2010 - 04:20 | 235208 nevket240
nevket240's picture

Idiotic Manipulative F#ckwits + George Soros = Trouble.

regards

Thu, 02/18/2010 - 06:18 | 235227 Escapeclaws
Escapeclaws's picture

Gold is up in euros down in the dollar. Gold is therefore holding more or less steady in intrinsic value.

Thu, 02/18/2010 - 06:46 | 235238 Anonymous
Anonymous's picture

Gold is MONEY.

What else would you expect ?

Thu, 02/18/2010 - 08:35 | 235270 Anonymous
Anonymous's picture

if your bearish pony up:

Gold market analyst Peter Grandich could not be more enthusiastic about tonight's announcement by the International Monetary Fund that it will sell another 191 tonnes of gold. In commentary headlined "Even When Opportunity Knocks a Man Still Has to Get Up Off His Seat and Open the Door," Grandich writes that the IMF announcement could actually hasten gold's rise:

http://grandich.agoracom.com/2010/02/gold-update-%e2%80%9ceven-when-oppo...

But then Grandich puts his money where his mouth is. In commentary headlined "An Open Challenge," he offers gold bears a $50,000 bet that gold will see $1,200 per ounce before $1,000 per ounce:

http://grandich.agoracom.com/2010/02/an-open-challenge/

Thu, 02/18/2010 - 10:27 | 235316 Anonymous
Anonymous's picture

The IMF announcement is having zero effect because central banks/bankers have zero credibility.

After the requisite early morning push down by TPTB, gold is rallying back through $1110 heading for yesterday's closing level, $1120.

Thu, 02/18/2010 - 11:09 | 235334 BernankeCo
BernankeCo's picture

The future for the USA is very bleak; a future resembling that of a socialist country like Canada or UK, but far worse.

With mass complacency to big government, nanny state initiatives people's constitutional rights will slowly be eroded.othing!" We live in a Financial Aristocracy and D1CTAT0RSHIP!

Thu, 02/18/2010 - 11:03 | 235355 cocoablini
cocoablini's picture

It's an accounting scam-when does India take delivery? Like never, folks. They pass the paper to India and hold the gold in London or NY. Give me a break.
If India took possession like China took possession last year(because they are making their own exchange in Hong Kong) then gold would have shot up 100 bucks again as the Brits would have to go GET the gold on the open market.

Thu, 02/18/2010 - 18:51 | 236520 Anonymous
Anonymous's picture

Is gold the next currency for an ageing Australia?
The main demographic of people selling gold jewellery, coins and ingots is the 55 to 80 year old bracket. Sometimes referred to as ‘scrap gold’ it is now being sold at unprecedented rates. The reason may be two-fold.

The price of gold is now at its highest on record and with the global financial crisis cutting into the retirement and superannuation savings of many people, the sale of gold may be another way of supplementing income for the elderly.

A spokesperson from the retail gold sector, Michael Cohen of the Gold Company, reported that prices paid can vary from $250 to $950 an ounce depending on the company that consumers are dealing with. Mr Cohen advised that it is easy to determine approximate value.

“Separate the gold into 9ct, 14ct, 18ct etc… Then weigh each batch separately. Multiply the weight by the percentage of gold in the batch (e.g. 0.375 for 9ct) and then multiply that by the gold price of the day. That figure, less the refining costs and profit of the buyer, is what you should be offered.”

Other good tips for prospective sellers is to make sure you deal with a company that gives you the option to accept or refuse the offer with no hidden cost to you; ensure they have contact numbers listed for you to talk to someone and an address that you can visit their offices if necessary; and if you are not sure you are getting the right price, shop around.

Fri, 02/19/2010 - 16:36 | 238042 Anonymous
Anonymous's picture

SO in effect if the banks are selling Gold they are receiving currency back. Sounds to me that we are at a top in the yellow metal or in other words they are getting short!.. Another example bankers make loans to unsuspecting mortgage borrowers when real estate prices are inflated , market tumbles, mortgage underwater , property into foreclosure, bad loan ,...bank writes it off owns property sell property make new loan hmmm ! Circle begins anew

Wed, 02/24/2010 - 12:23 | 243124 aka_ces
aka_ces's picture

deleted

Mon, 04/19/2010 - 08:32 | 307593 Tom123456
Tom123456's picture

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