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IMF Selling One Eighth Of Its Gold Reserves, Will "Safeguard Against Disruption Of The Gold Market"
In what can only be called a rather surprising development, the IMF has disclosed it is selling 403 metric tons of gold, or about one eighth of its total gold holdings. The reason: to continue providing lending to the poorest countries. Just so readers visualize who these "poorest countries" are, and who this current manipulation in the gold market will presumably benefit, here is a map of the IMF's most recent activities:
“I am delighted that the Executive Board has given its overwhelming
backing to a strictly limited sale of Fund gold to put the financing of
the IMF on a sound long-term footing, and enable us to step up
much-needed concessional lending to the poorest countries,” Managing
Director Mr. Dominique Strauss-Kahn stated. “These sales will be
conducted in a responsible and transparent manner that avoids
disruption of the gold market. Most importantly, the sales are strictly
limited to 403.3 metric tons, which is one-eighth of the Fund’s total
holdings, so the IMF will continue to hold a relatively large amount of
its assets in gold.”
The new income model
is designed to provide the Fund with more diverse income sources that
are better aligned with the variety of functions performed by the Fund,
with a central component being the funding of an endowment with the
profits from these limited gold sales. Resources linked to the gold
sales will also be used indirectly to increase the Fund’s capacity to
provide concessional loans to low-income countries (see Press Release No. 09/268).
The gold sales could be conducted on-market in a phased manner over
time, following the approach adopted successfully by the central banks
participating in the Central Bank Gold Agreement.
Participants in the recently renewed agreement announced ceilings on
sales of 400 tons annually, and 2,000 tons in total during the five
years starting on 27 September 2009, and noted that the Fund’s sales
can be accommodated under these ceilings. Hence, on-market gold sales
by the Fund will not add to the announced volume of official sales.
As one of the elements of transparency, the Fund will inform markets
before any on-market sales commence. In addition, the Fund will report
regularly to the public on the progress with the gold sales.
Conclusion: even more forced capital reallocation disguised as a "transparency" boosting initiative. Next up: rioting in Goldbugland.
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FWIW: ACORN helped me w/ my taxes. they were nice. I'm an actual poor person.
Two buyers:
China (in exchange for some US Treasuries)
American Barrick - looking to buy out of 9 million ounces in hedges.
I have some bearer bonds I bought in Chiasso from Japan's minister of finance. If I go to the IMF, can I buy all the gold that they have?
Is this a trick question?
Holy crap. Karl is more pissed than usual.
And right .... as usual.
Do you think the IMF would sell me 10 troy OZs at spot with no premium?
haha I thought Karl's head might explode.......those red spots next to his nose got a lot redder........
well, maybe it wasn't quite 330 years ago...
Heard that too!
well, how a coin looks sometimes is not so important as how much it weighs. it is one thing to be a coin collector and another to be a bullion buyer. just a thought....
trust me, in the days and years to come, you would be able to sell them all and nobody will give a hoot about dings, and imperfections etc.
now some coin sellers will try and tell you different, but it won't matter. for bullion, it is all about weight, not how a coin looks. people who run around talking about coin collecting with bullion coins etc, are just people trying to rip you off and wanting to make you pay more per oz than you should.
for example, they have a thing called 90 percent silver coins and all that means is pre 1965 silver coins. people call them junk silver. but when it comes time to sell, people will line up to buy it.
two good dealers to deal with are :
bullion direct out of austin, texas, and you can only deal with them on line and you can't talk to them or pick up your product. you just have to trust them to deliver and they do deliver albeit, sometimes their email responses are somewhat slow. if you want a live voice on the other end of the line, you can't beat franklin sanders, the moneychanger of tennessee.
This is old news, at least 18 months old. Congress approved this earlier this year. It should have been factored in the market.
Only television commercials now are for debt relief and gold jewelry buys.
Suddenly every country is denominating bonds in dollars and IMF is announcing (again) sales of gold reserves.
Those that state the currency risk is hedged (Why not denominate in any currency or home currency then?). The dollar is about to get bitch-smacked and every holder made to kneel.
Central banks fear the lemmings fleeing to a unit of scarcity beyond their control, so they use psych-op tactics and threats of sale of a mere $13 billion. What's that (GS bonuses for last month, 2% of TARP?). Bernanke's hot printing press must make the whole population dollar hostages for effect. Ruination must be equally borne.
Antiquity is littered with the corpses of clever but broke bankers. Gold was the bridgegap to the next viable economic island.
You don't backstop $23 trillion, buy your own debt, manipulate every conceivable market, lie repeatedly for effect, and then go on your merry growth way! BTW, you could buy every wage earner in the USA a new $200K home and BMW with that.
GOLD, GOLD, GOLD, forever. They are about to pull the trap door.
With the dollar circling the proverbial toilet bowl, I'd sleep much better if the U.S. Treasury issued a few more bonds and bought the IMF gold for the US. The echos in the underground vaults at Fort Knox are really creepy.
SIMPLE really---- JPM, BARRICKS, BARCLAYS, GS are all in the red on their gold short positions, with momentum gaining and the Chinse buying Gold would breakout...its either the IMF sell them the gold or the USA bailing them out a second time and a subsequent global financial crash.
They are selling the gold so Barrick can buy it to cover their hedges for gold. This was too easy....
$12 billion is chump change to the Chinese. They will buy this gold, like you buy a latte at Starbucks.
As for Karl, I was reminded of the movie "Scanners". As Beck would say, "blood shooting out of his eyes".
So right you are. From Jim Willie CB:
"The IMF gold transfers are clear redemption of gold for USTBonds!!! The Chinese indeed have a bid under the gold price. They have decided to push the gold price over 1000. Perhaps they thought the time was right, after their orders to Obama not to reappointment Bernanke as USFed Chairman were ignored. Bernanke is banned from setting foot on Chinese soil. Obama takes orders from Goldman Sachs, not Beijing."
http://www.321gold.com/editorials/willie/willie091809.html
We are in deflation. Gold price is coming down.
Ok Prechter... All that wave counting has your head screwed on the wrong way ;)
A shocking development, a bolt out of the blue sky.
April 7, 2008:
Strauss-Kahn applauds the idea of selling 403.3 metric tons.
http://www.imf.org/external/np/sec/pr/2008/pr0874.htm
May 6, 2008:
IMF says it will sell 403.3 metric tons of the Fund's gold holdings as part of its new income model.
http://www.imf.org/external/np/sec/pr/2008/pr08101.htm
July 6, 2009:
IMF says it's probably going ahead with the sale.
http://www.imf.org/external/pubs/ft/survey/so/2009/NEW070609A.htm
This gold will not hit the market. It first must be offered "directly to central banks or other official sector holders if there were to be interest from such holders." Any bets that the whole amount will not be subscribed to by central banks? Didn't China just build a vault in Hong Kong?
Anything not first sold to central banks will be sold "on-market in a phased manner over time." It won't be dumped on the market. Also, the amount being sold is not in addition to the maximum amount set by the central banks in their 5 year agreement (400 tons per year). It falls under that umbrella.
They will fight to keep the price of gold down at all costs. If the gold price were to surge and become headline news, then the reality of central banks' debauchery of their currencies would become plain for all to see, and any further QE would become impossible.
The Chinese will continue to unwind their dollar positons as quietly and as quickly as they can without triggering panic, why wouldn't they? Part of the unwinding will consist of increasing their gold reserves, and to those who argue that gold has little intrinsic value, it sure has more intrinsic value than paper dollars. Further, if you hope one day to replace the dollar with the Yuan as the world's reserve currency, it does not hurt to hold very substantial gold reserves to give it credibility.
Great article, greater comments. Actually I hope gold craters real bad, so I can add to my holdings. They can pull out all the tricks in the book and I couldn't care less. Physical gold, not some bs electronic position, is what I want, and I am only price sensitive with regard to big downwards movements, actual price-points are for goldtraders. Some others have mentioned it too, I think this is a (temporary) bailout by stealth for the USD. If USD goes higher there's a lot of worldwide unwinding to do, which is fine with me too. So the IMF announcement is excellent news.
Most of the central bank "sales" are really just a recognition that "leased" gold can never be redelivered by the bullion banks. Central bank leases emptied out the gold vaults a long time ago, and the "sales" just orchestrate the orderly unwind of the bullion bank shorts.
China demanding physical delivery is like a huge margin call on gold against the bullion banks. The IMF is bailing them out by providing more physical gold for delivery to China, but that only works once.
I strongly suspect that, were CBs not to intervene, that an orderly unwind of short gold (and especially silver) is not possible and what we could be looking at here is a VW style short-squeeze should China pull a Porsche and stand for delivery. Anyone have recent and credible numbers to support / refute this? (Need physical bullion status of the bullion banks).
Will know for sure when Dec delivery comes around (possibly Sep). Most likely scenario is that the BRICs don't unleash PM armageddon on the west, but instead play this out over a few years. Still, that provides some long term price support.
We will know the BBs are back in control when ABX re-establishes its hedge at a higher price. CBs have more than enough gold (1 billion ounces) to save BBs that wind up in trouble, question is how willing they will be to save given that the physical gold they lose is not coming back for many many years.
This is different from previously announced sales. This time the IMF is actually selling, straight to China no doubt, or to London where the scammers got caught short when China demanded allocation to Hong Kong.
BRICs must have threatened to stand firm for delivery at the end of the month and the BBs think it's not a bluff. Also explains why ABX panicked so badly. There is no other explanation.
If the BRICs stand big then the BBs are fucked, regardless of what the IMF does. Potentially, even if CBs come in for the stick-save, the BRICs still have the capital and the stones to clean them out, leaving a bunch of vaults full of paper IOUs.
Needless to say, the banksters will find a cheap out. One huge advertising campaign for the paper ETFs coming up!
http://www.zerohedge.com/article/guest-post-what-heck-going-china#commen...
http://www.zerohedge.com/article/who-going-buy-gold#comment-61453
http://www.zerohedge.com/article/does-gold-already-price-future-inflatio...
http://www.zerohedge.com/article/barrick-gold-conundrum#comment-68641
http://khqqdw.bay.livefilestore.com/y1pEgfvCOroxNFiJlLMuG5P9pCMxgwImKMm5...
Dollar looks like it's going to do a bit of attention whoring to take some focus off of gold.
Bet she puts on her best blonde wig.
http://www.youtube.com/watch?v=kO6qrtSTkew
They are in a very, very tight spot eh?
As I understand it the IMF announcement was made in March or April already, so this is nothing new, only intended to get things moving. Higher equity in combination with lower USD was and is utterly ridiculous, ponzi to the max, and the Chinese (generic, its everyone, the Ruski's, the Arabs, anyone sick of their USD holdings getting wiped out versus normal currencies) are totally fed up with it. However you dice and slice it there are abnormal quantities of USD shloshing around, so how they are ultimately going to solve that problem is beyond me. If it plays out short term how I think the USD catches a bid, carry will be unwound, equity will drop, gold will drop (enabling shorts te unwind) and treasuries will go up. Not necessarily all together at the same time, dislocation is that great in almost all asset classes that I can not pinpoint exact movements, but broadly that is my scenario over the coming 2-3 weeks.
Yes, the IMF have been doing this time and time again. Whenever the price action gets a bit bullish, the IMF threaten sales. Old story.
Difference this time is that they are actually selling.
Up until recently, I agreed completely with your general prognosis, that eventually the Fed would have to rescue the dollar, ease up on QE, trigger an equity collapse and flight to safety in order to gather enough foreign interest in treasuries to lubricate stimulus 2.0
The Fed's reckless disregard for the dollar and BRIC action recently makes me a little less sure. Perhaps we will see aggressive global competitive devaluation afterall, with a PM panic as players seek protection. Still lean towards your scenario, the latter may be a head-fake, but have hedged accordingly.
Whew! ....Finally. I am so sick of that story. Jesus, talk about beating a dead horse.
I've been buying my Pyrite on eBay for the last 6 months.
--Mrs. Madoff
http://cgi.ebay.com/30-FLAWLESS-PYRITE-SUN-ALL-WITH-AMAZING-LUSTER_W0QQi...
what in numbers are the national debt, interest on the debt, the revenue & expenditure.
One of the most disturbing aspects of this "announcement" is that the media is treating it like it's NOT been made at least half a dozen times over the past couple years -- same announcement, same amount !
Media collusion in govt corruption gets more blatant every day........
""But so corrupt was every department of the administration, that the country benefited but little by the sums which thus flowed into the treasury. Courtiers, and courtiers' wives and mistresses, came in for the chief share of the spoils. One contractor had been taxed in proportion to his wealth and guilt, at the sum of twelve millions of livres. The Count * * *, a man of some weight in the government, called upon him, and offered to procure a remission of the fine, if he would give him a hundred thousand crowns. "Vous etes trop tard, mon ami," replied the financier; "I have already made a bargain with your wife for fifty thousand.""
Popular Delusions by Charles Mackay
Funny thing. The IMF could sell all the gold they have, they could dump all 3200 tons they have on the market all at once,
and it would only make a dent in the price for a short while.
I'm sure they'd like you to think it would have a powerful long term affect, but it won't.
4,864,000,000 ounces of gold in the world.
We each get one. :)
The IMF selling gold is like a wrestler selling his muscles.
Banksters. Scum of the earth.
I, Franklin D. Roosevelt, President of the United States of America, do declare that said national emergency still continues to exist and pursuant to said section to do hereby prohibit the hoarding gold coin, gold bullion, and gold certificates within the continental United States by individuals, partnerships, associations and corporations and hereby prescribe the following regulations for carrying out the purposes of the order:
IMF lowers the price of Gold to $250 then, Obama declares it illegal to hold and pays you the going rate. It happened before
The age of non-materialism is coming. Your wealth will be measured by your creativity, knowledge, and ability to love. Get ready.
eeeek. stop it you're giving me the creeps.
One eighth? Holy Cow.
"The reason: to continue providing lending to the poorest countries."
To quote Marla "Here comes an avalanche of Bullsh!t"
This was already baked into the cake Friday morning. From Briefing.com:
10:42 ET 10-Yr: -14/32..3.441%%.. USD/JPY: 91.35.. EUR/USD: 1.4705This may be where the dollar and gold couple in terms of price action.
The conventional wisdom is that the buck will recover from here triggering a market collapse, sending gold down with the market.
We may see gold go up with the dollar as there is a flight to quality, and the flight to higher quality may get pushed more.
my first post here, i have nothing to add just can't resist testing my account, so i post silly little pic for the goldbugs
http://i34.tinypic.com/2rnkmz5.png