India Negotiating Purchase Of Remaining IMF Gold As Spot Hits $1,177/Oz

Tyler Durden's picture

$1,200 here we come. Bernanke just got punk'd. Again.

From the Financial Chronicle of India:

India is open to buying more gold from the International Monetary Fund (IMF). It bought 200 tonnes for $6.7 billion on November 3. The Reserve Bank of India (RBI) may well buy
IMF’s remaining hoard of 201.3 tonnes on acceptable terms, which are
now under negotiation.

A government official said that the additional purchase would depend on
the “successful pitching by RBI”. “RBI is an independent body, and the
government does not interfere in its affairs. It will get the gold if
its bid is successful and at the price it has offered,” said the
official.

RBI did not respond to Financial Chronicle questions if it was bidding
for the remaining IMF gold. The purchase of the first lot of 200
tonnes, RBI had said at the time, was a part of its foreign exchange
reserves management operations.

Responding to query from FC, an IMF spokesperson said the gold sale
process was still under way and “there is no fixed timetable for
completing the sale”. Its spokesperson further said that “the fund does
not wish to comment on discussions with individual members.”

RBI has good reasons to further enrich its gold reserves. In just three
weeks it has been able to benefit by as much as $800 million on the
investment of $6.7 billion it made in buying 200 tonnes from IMF.

Since 1999 RBI has been periodically valuing its gold reserves at
“prices close to the market”. It has not done so since it purchased the
gold from IMF.

RBI bought the 200 tonnes at $1,045 an ounce. The transaction, from IMF
to RBI, involved daily sales that were staggered over a two-week
period, October 19-30, with each daily sale conducted at a price set on
the basis of that day’s market price.

etc.

What happens next, aside from full blown gold mania/panic, is anyone's guess. However, one thing that is becoming certain, is that Bernanke, in the immortal phrase coined by Snatch, is now proper fucked.

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Anonymous's picture

And while their PM is here on a state visit. Like a Hallmark card from the "Fuck Your Greenbacks" category.

Mazarin's picture

Why is IMF selling gold. And why does India get dibs? The IMF must know that its sales are not large enough to drive gold prices down. India is hardly the country capable of making the highest bid. The IMF has this gold on their books at something like $45/oz. Why liquidate now, into a strong uptrend? What are they doing with the cash - buying US Treasuries? Motive? Mode of selecting the buyer?  "Here, you get the gold if you promise not to dump your dollar currency reserves"?

nonclaim's picture

Just a thought, maybe India is preparing for war and then importing ammo/food with INR could be troublesome. In this scenario they need gold and nobody else wants it at this price.

JacksWastedLife's picture

India is a wise society. They wouldn't spoil themselves with such an incredible stupid thing like a war. That level of stupidity is only acceptable for Russians or US. And of course, they have enough of food and ammo. =)

Anonymous's picture

Oh really. It won't be long before they are looking down the business end of a Peacekeeper missile (containing ten nuclear warheads). The missile will be aptly re-named The Goldminer because it will be used to get the gold returned to where it came from.

Anonymous's picture

You make me laugh, kid!

But then you've probably never been a rocket scientist! And clearly lacking even basic geography and high school physics to figure this one out. Yeah, I used to work on these beasts - Q and CNWDI cleared. Look those up, son.

Just try launching a Peacekeeper missile at India - go ahead - see what happens. First it won't have enough fuel to even make it to India. And no, you can't just duct-tape some gas tanks onto the side.

Then there's the guidance systems which were designed specifically for a polar route to the USSR and no further. South of the equator? LOL! Try entering a negative latitude into the guidance systems - you will nuke Russia instead if it even accepts it.

You're funny kid but not in a good way. Just like the ignorant spew on the Military Channel. Your jingoistic, masturbatory chest beating is truly pathetic and sad. Every one else is the world is laughing at you. That's what pissed me off, son, because they are laughing at me to by association with twerps like you. You make actual American patriots look bad.

Sadly America has screwed itself with its own hubris - ancient Greek term for the cause of pretty much all tragic _fail_. We are fail. The Empire isn't striking back - it can't; we are too thoroughly screwed already. I'd wish it weren't true but there's no denying reality at this point unless you are taking some seriously hallucinogenic drugs - and you really need to share if you are - people are suffering.

Anonymous's picture

India might get 200 tons of Tungsten bars instead based on IMF's reputation or lack thereof.

Anonymous's picture

what a wise comment. how about the constant war they keep on fighting in kashmir? how about war they had in bangladesh and even skirmishes with china?
if u haven't noticed, india, mauritius and sri lanka anre all countries with a large amount of hindus living there. this is the culture in which gold is an important part of ceremonial weddings, hence there is always domestic demand for gold there. they are not "wise", they are.. what's the word. primitive.

genieous's picture

The IMF has long done the 'carrot-stick' routine with gold, mostly 'stick'.  Every time gold popped its head up above the agreed upon (by CBs) resistance, to make a break for the upside, the IMF obediently trotted out the shop-worn tale of impending gold sales.  To 'help the poor' of course.  Sure.  And I am the Tooth Fairy.  Honest.

 

India has been confirmed by a rep of the IMF as having been an official repository of IMF gold.  I don't have the exact reference for you, sorry.  The quote said that the amount India held was the exact amount they purchased from the IMF.

 

India's appearance at the White House, with full bells, whistles, regalia, specially built tent, the whole enchilada, especially after the rather futile China trip by El Pres, is rather breathtaking.  The Indian PM seemed rather bemused by the whole gala.

But the Untied States needs to make nice now, because we are going to need someone, anyone, please? to be our friend.  We certainly know how to make enemies.

As a side note, I work as a precious metals broker.  The gold spot as of 6:27 a.m. CST is 1180.60.  We have been selling like crazy and can hardly keep up with demand.

Anonymous's picture

"The gold spot as of 6:27 a.m. CST is 1180.60. We have been selling like crazy and can hardly keep up with demand."

Ya'er right..What R U doing here? This place is for looser traders and shorts. When things are smooth people enjoy and NOT seek truth....

genieous's picture

heheheh....well, Nony, maybe so, mebbe so. 

I have ALWAYS been a lover and seeker of truth, even when it hurt like Holy hell. 

Why am I HERE? At Zero Hedge.....?  I don't notice the losers, I guess.  We are all losers at something.  I know next to nothing about CDS and IRS derivatives.  I would lose my shirt at those.  I don't day trade, I don't trade bonds, know next to nothing about them.

I get education almost everywhere I look.  I am also a born skeptic, so I check everything out as I have time, which leads me to more new knowledge and more truth.

"The Truth is Out There"

Anonymous's picture

My wait time for small delivery is a full week longer than just a month ago.

Anonymous's picture

India is fully vested in the carbon credits trading scam! It's probably Tungsten.
India is a good place for the NWO folks to hide that shit.

SRV - ES339's picture

Sorry Anon, but this is for Tyler...

You pathetic excuse for a man... posting this (in the immortal phrase coined by Snatch, is now proper fucked) long after Marla has turned in for the night!

Otherwise, fucking (long after Marla has turned in for the night) great post!

SRV-ES335

faustian bargain's picture

I can hardly believe the news every day...it's like I'm watching a movie.

MsCreant's picture

If you made this stuff up, they'd say it was over the top and reject it in Hollywood.

faustian bargain's picture

yeah, except for the part at the end where the alien parasite pops out of Bernanke's beard. They'd be all over that.

MsCreant's picture

"alien parasite pops out of Bernanke's beard."

That's not fiction, all GS employees must accept a vampire squid as their own personal savior before they can collect their bonuses. Sort of a cross between "Aliens" and "The Firm." Just doing God's work. You may leave GS, but the GS squid never leaves you.

Hephasteus's picture

You can leave but you'll be phoned home by switch back to AT@T stalkers.

waterdog's picture

The difference between reality and fiction is that fiction has to make sense.

JacksWastedLife's picture

Actually, it is just a set of glowing pixels on your screen. Those pixels are shaped in a form of English sentences along with little photos from a famous Hollywood movie. =)

CoopDeluxe's picture

This is getting interesting.  How can anyone say gold is in a bubble?  I'm gonna sit back with my gold, my glock, and some popcorn.  This is going to be one hell of a show. 

Anonymous's picture

How can I say gold is a bubble? Because RBI is in good company. My wife's folks just bought gold for "protection." These folks are living breathing contrary indicators. Put their life savings into the market in December 1999 so they "wouldn't miss out." Sold SW Florida real estate in 2001 but bought it back in March 2006 so they could "fund their retirement" (they were mid-60s at the time).

When these people buy gold, gold bugs are proper fucked.

Anonymous's picture

I'd say that grandma and grandpa are about to redeem themselves as savvy investors.

Anonymous's picture

I'm sure they will. After all, this time is different.

andy55's picture

Great video -- thanks for sharing.

I do think Rickards is talking his book a bit though.  What he doesn't say is that for gold to reach those levels (his "8th grade math" argument), basically there would have to be a complete dollar collapse.  I'm not saying that won't happen as things play out in the years to come, but let's just call a duck a duck by agreeing that gold at those levels implies US collapse and complete disarray. 

Even the stinking corruption on the hill isn't strong enough to stem a rioting population.  Hence, I'd argue that the brakes get put on at $2-4k levels, which I do think Rickards advocates rather well.

MsCreant's picture

I was really interested in the idea of the dueling printing presses between China and the US, what Rickards termed a game of "chicken" as each country shorts its own currency. Rickards is very ironic, stating he doesn't want to be in that trade and this is why he will sit on the sideline with gold.

Me, I go, WTF? I understand the race to devalue, but I think I am missing something more here. This looks like mutual assured financial destruction. Worse than nukes maybe. As in, I must be wrong, this is not what is really going on...

SRV - ES339's picture

Thanks for the post... Rickards spots are always great!

"if the S&P is up 30% and the dollar is down 30%, how much did you make"... the silence was deafening!

Think Andy missed the point just a bit though... it's about if (when) gold is traded as money... then all bets are off... buy it (or better, good miners) and relax and enjoy the fireworks (if that's possible with the mess it will cause).

SWRichmond's picture

It begins as the modern version of debt jubilee: all debt is forgiven by inflating it away, the pressing of the giant "Reset" button.  It ends as competitive currency devaluation where each nation seeks to soothe its own populace with export-based jobs, leading to trade war then actual war when the society that lost the most during the devaluation decides they have nothing left to lose.

Anonymous's picture

disagree. the dollar/gold correlation doesn't have to always hold true. shocks, whether psychological, or based on supply, can cause delinking of generally correlated items. There have been some recent days of gold still going up on strong dollar recovery days. no reason that there cant be more of that. ive seen a lot of talk and reasoning estimating a 4,000-4,500 number based on a 40% fractional reserve gold standard.

Anonymous's picture

Great quote: "If the market is up 30% and the dollar is down 30% what have you gained?"

msorense's picture

A lot if you are buying stuff made in Asia.  Nothing if you're headed to Europe.  I can't stand how the Asians patronize the dollar.  There's even talk about the Chinese devaluing their currency as a Black Swan.

 

 

TomB's picture

Check out this one as well:

I propose to you that we can estimate that as a mere commodity today, gold is relegated to a trading range of between $700 and $5,000. As a currency, which it has not been since at least 1933, it would be range-bound between $4,000 and $11,000 according to Jim Rickards. [7] And set free to fill its ancient role as a wealth reserve, gold will rise to somewhere between $10,000 and $100,000 in today's dollars.

http://fofoa.blogspot.com/2009/11/gold-is-wealth.html

Souverainiste's picture

I wish my wages were denominated in rupees.  I'd keep my savings in curry before my currency.

Anonymous's picture

Raj Rajaratnam is that you? You can get ZH while inside a federal detention facility?

MsCreant's picture

We need China to go on a silver buying spree, next. Or perhaps India, now that gold is too expensive for wedding season?

Assetman's picture

Wow... there's a lot of scary things that can happen at this point.

My impression is that with all of the IMF gold used up and now backing certain sovereigns, the battle of devaluating currencies is now upon us.  India, if these purchases are finalized, have effectively told the rest of the world "it's on".

The one thing the Federal Reserve can ill afford at this stage of the game is uncontrolled dollar devaluation-- they've even hinted as much in recent engagements.  This is a high game stakes game of poker, and the rest of the gambling world has gold as a backstop to raise the ante.  The U.S. Federal Reserve has debt... and who knows what left at Fort Knox and the NY Fed.

Your move, Mr. Bernanke.  Just remember that folding that hand is a viable option.

MsCreant's picture

Assetman,

I posted a link above to some video commentary by a guy named Rickards. I'd love to know what you think. Some of it could be hyperbolic, but his comments about the US and China in a printing show down are really interesting. Never heard this take before.

Assetman's picture

This is a very interesting video you found, McCreant.

This really isn't too far off from the Albert Edwards comments about the Chinese announcing a yuan devaluation when no one really expects it.  I think we are nearing the point where the conditions are in place for that to happen.  Those that need the gold as a backstop have purchased all they can from truly viable suppliers.

The real question is how far does Ben Bernanke want to take this high stakes game?  The Chinese need a strong dollar for investment purposes and a strong U.S. economy for their own exports.  It's almost impossible to deliver both-- and right now, we are delivering neither.

So... if Bernanke wants to continue to play the game of burning the buck... the Chinese are going to play right along-- perhaps even more aggressively.  More importantly, so will other Central Banks.  In this environment, if the buck burns... it's not likely to be the "controlled burn" the the Federal Reserve desires.  It's going to be a full clusterf*ck blaze coming from all directions.  Gold in this environment is a really big winner.

The other possibility is the Federal Reserve-- or the Chinese-- will fold, and reverse policies that are destined for a train wreck.  Rickards does a very nice job describing the analogy of the Soros-Brits battle, with the Brits evenutally saying "uncle".  China stands to lose a lot from competitively devaluing (higher unemployment, hyperinflation, etc.)-- but the U.S. would get hammered with an out of control currency.  Sovereign CDS would go through the roof.

My guess is that someone will "fold"... and the volatility event plays itself out.  There's been an aggressive buying of Treasury new isses most recently, and market yields are at levels that rivaled the safety trade last fall-- extremely weird, considering where equity prices, risked-based bonds (or CDS spreads), and gold is trading.  One primary reason is that the Fed is buying crappy MBS from the world, and the world is financing the U.S. deficit by proxy.

This can all end on a freaking dime.  Boom!  Volatility event.  Imagine the U.S. halting MBS purchases and what those ripple effects would mean.  It's freaky stuff, for sure... but I think the Chinese have hit the boiling point.

Wait for the DXY to break the 71 level... it's going to be a very wild ride.  The question I ponder is: how long will it take for us to get there?

 

MsCreant's picture

Thanks for your take. It is as scary/irrational/cowboy as I thought.

faustian bargain's picture

Well, we're under 75 now...almost a 52 week low.

Assetman's picture

We're getting there... also watch the U.S. sovereign CDS, and risked based CDS spreads as well.  The former is already making a move higher; the latter perplexingly more stubborn.

Won't last.

faustian bargain's picture

I'm a layman learning this shit as it happens, so I haven't figured out what credit default swaps are yet...I'll take your word for it.

faustian bargain's picture

also gold hit 1179 a minute ago.

SWRichmond's picture

China can cement their role as Asian Mercantilist with a two-pronged strategy: get their people to stock up on precious metals, and use their USD to buy JPY. 

Where do you guys think this Yen strength has been coming from?