IMF: Gold Is Scarce “Safe Asset” And “Growing Shortage of Safe Assets”

Tyler Durden's picture

From GoldCore

IMF: Gold Is Scarce “Safe Asset” And “Growing Shortage of Safe Assets”

Gold’s London AM fix this morning was USD 1,655.50, EUR 1,261.33, and GBP 1,039.04 per ounce. Yesterday's AM fix was USD 1,654.00, EUR 1,261.63 and GBP 1,040.25 per ounce.

Silver is trading at $31.56/oz, €24.01/oz and £19.78/oz. Platinum is trading at $1,583.75/oz, palladium at $637.50/oz and rhodium at $1,350/oz. 

Cross Currency Table – (Bloomberg)

Gold fell $0.90 or 0.05% in New York yesterday and closed at $1,658.10/oz. Gold has been trading sideways in Asian trading and remains in a tight range in Europe this morning near $1,656.07/oz. 

Gold remains supported this morning as the ECB signalled that it would intervene in the debt markets on worries about Spain and the risk of contagion in the Eurozone.  ECB board member Benoit Coeure said “the European Central Bank still has its bond-buying programme as an option”.  

Investors are also still concerned about other peripheral Eurozone economies like Italy and how they might affect the core Eurozone nations.  Italy saw its 1 year borrowing costs rise for the first time since November during its sale of short term bills yesterday, ahead of a 3 year bond auction later today.

The number two official at the US Fed, Yellen, said overnight that due to high unemployment facing the economy, the Fed has left the door open to further Fed action including QE.

Further QE and the continuation of ultra loose monetary policies will be positive for gold.

IMF: Gold Is Scarce “Safe Asset” And “Rising Demand for Safe Assets” 
Further confirmation of gold’s continuing but gradual renaissance as a safe haven asset was given by the IMF yesterday who warned that a “growing shortage of safe assets” poses a threat to “global financial stability.” 

The IMF identified $74.4 trillion of potentially safe assets today, including gold, investment grade government and corporate debt, and covered bonds.

Dow Jones Industrial Average Index in Gold USD 

Sovereign debt crises are reducing the number of governments that investors trust to issue "risk-free" bonds just as new financial regulations are increasing demand for safe securities from banks.

Importantly, the IMF’s latest Global Financial Stability Report’s introduction finds that 

"In the future there will be rising demand for safe assets, but fewer of them will be available, increasing the price for safety in global markets.” 

“Both the lack of political will to reshape fiscal policies at times of rising concern over debt sustainability and an overly rapid reduction of fiscal deficits limit governments’ capacity to produce assets with low credit risk.”

The IMF has warned regarding illiquidity in “safe haven” markets. Gold remains one of the most liquid markets in the world and the illiquidity in bond markets would see increased safe haven demand for gold. 

The IMF is warning regarding deteriorating public finances. As many governments see themselves being downgraded - safe haven bonds may become less safe.

This bodes well for gold in the coming years and should see gold again be seen as a leading if not the ultimate safe haven asset.

Gold To Reach $2,000/oz Within Year On QE, Inflation and Spain -  GFMS 
Gold may climb to a record above $2,000 an ounce within the year as concerns about sovereign debts and inflation lead to safe haven and inflation hedging demand from investors, Thomson Reuters GFMS said.

While the near term may be “challenging” because of concern about demand in the top physical markets, especially India, the possibility of further quantitative easing will likely support gold.

The price floor may be at or below $1,650 an ounce, according to the report.

Gold 2 Year Chart- (Bloomberg)

“While short-term downside risks remain in place for the gold price, the economic and financial background continues to point to higher prices,” GFMS said. “It is too soon to dismiss the possibility of further quantitative easing in either the United States or Europe, and the Chinese government may yet ease its monetary policy.”

Global gold demand rose 0.6 percent last year as a jump in central-bank buying offset a decline in fabrication, GFMS said. Central banks boosted net purchases almost six fold to 455 tons last year, and may buy about 100 tons each quarter in 2012 as emerging countries maintain a similar rate of purchases and sales from Europe remain “tiny,” according to the report. 

Total investment fell 10 percent to 1,605 tons last year, with bar demand climbing 37 percent to a record 1,209 tons, GFMS said.

China’s jewelry fabrication may rise to a new high in 2012 after jumping 15 percent to a record 496 tons, according to GFMS. Growth in China will be driven by the country’s economic expansion, while exports will remain “moribund” due to a weak global economy.

It is important to note that GFMS have been quite bearish on gold in the long term in recent years. 

Any positive outlook has usually been short term in nature and tempered by warning that the price would “peak” in a year or two or the near term. There is the risk that they are again conservative and overly cautious.

South African Production Plummets Again 
On the supply side, South African gold production continues to plummet. South African gold production fell 11.5% in February from a year earlier, Juan-Pierre Terblanche, a spokesman for Statistics South Africa told Bloomberg today.

For breaking news and commentary on financial markets and gold, follow us on Twitter.

Gold 'to Hit $2000' on Spain Fears – The Telegraph

Gold Could Climb to $2,000 Within A Year – The Financial Times

Gold treads water; euro zone caution remains‎ - Reuters

Physical gold demand strong: GFMS - MarketWatch

IMF: Growing shortage of safe assets such as Gold – The Financial Times

Gold could peak in 2013 after 12-year bull run: GFMS - Reuters

China Buying Gold? - MarketWatch

Europe's banks beached as ECB stimulus runs dry – The Telegraph

How Serious are China and India About Their Gold? – Fox Business

Buying The Dips In Gold Has Been The Right Move For A Decade - Forbes

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GetZeeGold's picture



The Rothschild's get criticized a lot.....but the one thing they never lacked....was brains.


Zero Govt's picture

brains to do what ..take us forward or manipulate us into a sewer?

GetZeeGold's picture



You're doing it wrong.....they're subsidizing gold.....say thank you.


Zero Govt's picture

if the Rothchilds, and their front Govt, was out of humanities hair we wouldn't need Gold... we'd have a productive (free) economy

you need to lick-up on history mate, go find the key ingredients to economic and national destruction/bankruptcy'll find the words 'bankers' and 'politicians' have their thieiving hands in all of them

valkyrie99's picture

Maybe, but aside from heritage I still don't see why the Rothchilds get blamed for the fractional reserve systems that had already been going strong for 4 centuries.

Ace Ventura's picture

They're not doing it for you. They're only doing it because it serves their interests........for now.

What us peasants need to figure out is the approximate timing of when they will "pull it", so we can be at a safe distance. But yes, in a twisted sort of way we should be glad it hasn't been 'pulled' yet. Wish they would have subsidized the stuff when it was still $700 or so. But then again, it is much harder for the average prole to shell out $1,600 per oz when there isn't enough money in the bank for next week's groceries.


Zero Govt's picture

it's not up to them "pulling" anything.. it's 100% our call (and responsibility) pulling the plug on the bankers puppet that is Govt

Stop Paying Your Taxes

..then see how long the parasites last without their social drip-feed (tax) creaming off societies wealth 

Ace Ventura's picture

I'd love to stop paying my taxes. If you have a means of doing so that won't land me in prison next to Ed and Elaine Brown, Sherry Jackson, or Wesley Snipes....I'm all eyes.

If you're referencing 'voting the scoundrels out' as the way to pull the plug on the bankster puppets, I'm afraid that is no longer a possibility in the era of Diebold, flat out vote fraud, and a growing sector of the populace which is wholly dependent on the handouts it gets from gubment. If you're referencing physically uprooting the vile bankster puppets, 1776-style, as the way to pull the plug....then we're essentially seeing eye to eye. Although you do realize that makes us terrzit radicalz, right?



Zero Govt's picture

there is not a snowball in Hells chance of voting anyone anywhere to get what you want ...the entire system is rigged

the only system that gives people what they want as an individual is freedom (and free markets) ...that means zero Govt (no rules from on high)

bringing Govt down with a Tax Revolt is the surest way to not only personal and society-wide freedom but economic prosperity ..without the parasites (elite and welfare spoungers) of society creaming off productive peoples backs

there will be a Tax Revolt in the years ahead ready for it

MeelionDollerBogus's picture

It's called tax-havens, reporting a lower income & living off-grid. Where property-tax is the concern you leave. Where social solidarity is concerned everyone publicly says no taxes shall be paid and stands together - cops included - but we'll see. THAT day is the day no enforcement to prison happens.

Otherwise run. Just find another nation to live in that is safer for taxes & food supplies.

youngman's picture

It has been very is being the questin is who and bet is China is buying as much as possible....then again the last few days is the selling of treasuries...they never allow gold to look good when they are selling...back up on Friday...but lets see..just this week we added 100 billion in paper across the western world.....paper..more paper...lots of metal leaving the Comex from the customers accounts..and nothing going to the dealers..wierd...I also think there is some "need some Tax cash selling"

WoodMizer's picture

Question, how much gold is held in physical form above ground?

I remember a video that claimed that all the gold mined throughout human history would amount to a cube less than 150' to a side.

Are centeral banks buying physical or paper gold to serve as collateral?

Quinvarius's picture

1 trillion dollars in $1 bills covers about 1 square mile about 1 inch deep.

So we are looking at a paper cube of 1 square mile about 5.8 feet high.  Then you can do the math on how that would stack up on a  150 x 150 square foot base.

WoodMizer's picture

According to how stuff works

Humans have mined 10 billion ounces,

A cube roughly 25m to a side 15625m^3

312,500 tons

I guess CB holdings could all be physical


ivars's picture

I think first USD will go up and until USA default will remain world reserve currency ( about 2016).

USA partial default prediction

Only after that, the favor will switch to Euro zone. While USD is going up, there will be inflation in Eurozone, after 2016, in the USA etc.

EUR/USD prediction chart

After partial USD defaults or in imminent anticipation of such USD will start to go down, inflation moves to the USA (after/during 2016)

In this scenario, there will never be a time when gold will cost much less in USD (or EUR) than in costs today. There is no reason to be.

Gold prices 2011-2017

But, the gold bubble may end in 2017 with some settling price or perhaps some totally different currency system-when Gold/DJIA is around 1.

Gold bubble burst

DJIA/Gold ratio until 2016

DJIA/Gold chart has wrong intial part (2011-2012-2013) , to be corrected once we see how deep/long is current stockmarket correction, but it does not matter for the long term forecast.

Even this time schedule might be a bit hurried seeing how long equilibrium can be maintained employing more and more of current paper commodities- currencies which have reserve currency status, especially USD.

That is how I see it, at this moment. May be the whole sequence is not right-perhaps its too simple- but that will be clear before this year ends.

CH1's picture

Well, I think it will be sooner than that, but we're all guessing, and important parts of the machine are not visible to us.

eaglefalcon's picture

Partial default?  Alan Greenspan went on TV and touted "the United States will never default.  We can always print the money to pay our debt."  I guess debt monetization is technically not default.  We borrowed paper from you, we return you the same paper

MeelionDollerBogus's picture

DJIA/Gold ratio until 2016

DJIA/Gold chart has wrong intial part (2011-2012-2013) , to be corrected once we see how deep/long is current stockmarket correction, but it does not matter for the long term forecast.

How do you figure?

I think we can see dow/gold to 1.0 or 2.0 inside a year. Maybe 2 years if somehow both go stagnant vs the decade.

resurger's picture


a guy came to my trading desk today from Thomas Reuters and he told me that Islamic banks in the GCC  are about to decouple from the International Money market operations "

when i asked him how it works, he told me the IIBR "which is the Islamic Interbank Benchmark Rate" has 3 major subindicies:

1- The Wakala (Agent): you place your money with the bank, and then there is a human being out there who will go and trade with the money and give you the return next day or something.

2- The Murabha (Profit Sharing): you place your funds, the go buy commodities and then give you a proft at the end.

3- Mudarabah (Speculating): where you lend your money, they speculate in some commodities or islamic shares and then give you the return, i dont how different is it from the top one.

Either way, this index soon to go viral, becuase it actually moves the economies where you have people buying commodities (Gold,Silver, Copper, Iron , Stocks) and if they lose, they gurantee to give you your return back and incur the loss.

so now, you have a new MM index called IIBR

see here



El Oregonian's picture

As I get older that Physical Gold, like a pretty ex-girlfriend, seemed more beautiful when she's with someone else. I said long ago that I was a jealous sort and that she'd never again leave my side. We've been together happily ever since.

Best part, my wife approves completely...

Deo vindice's picture

Just don't take them canoeing. Lots of tragic losses happen that way.

ivars's picture

Updated with actual prices GOLD and SILVER prediction charts extended till September 1st. Seems like later (Oct 2011-green line) prediction fits actual prices better (actual prices-blue line):

Zero Govt's picture

so you think Gold will continue the downtrend into September?

you won't get an invite on King World News (KWN) with that type of down beat info

did you see Sinclair and KWN pump Dan Norrichi's latest cry the shorts got hammered yesterday? 2 months of downtrend and the shorts are laughing all the way to the bank (unlike high on hopium KWN listeners!)

but Dan is trying to put a positive spin on it, a (brief) 1% spike in Gold yesterday and he's trying to paint it as the shorts having a hard time when it's the longs that are getting fleeced every which way

KWN are approaching the Iraqi Information Ministry levels of shrillness

Sudden Debt's picture

but Bernanke said....


for God and the Printing Press?...

the almighty fiat?....




Die Weiße Rose's picture

" The IMF identified $74.4 trillion of potentially safe assets today "

( said Christine Lagarde with her asset Bernanked by tiny Tim )

IMF - Global has no "safe assets" !


Levadiakos's picture

IMF: Gold Is Scarce “Safe Asset” And “Rising Demand for Safe Assets”

The muppet craze goes viral. 

TheGardener's picture

If I were manipulating markets I would let some steam off on
Friday 13th, don`t even need to blame it on the weather.

Start over on Monday with dry powder legally transferred
from muppets accounts.

Hulk's picture

Investment grade Government debt ??? no such thing and the planet is about to run head on into that fact

Got Gold ???

Sizzurp's picture

The muppets will be left behind when the music stops.  If just a few of those 75 trillion try to make it into the gold market, actually own the physical, the prices will go stratospheric. The rush for the golden door will be a site to behold.

TWSceptic's picture

"It is important to note that GFMS have been quite bearish on gold in the long term in recent years. "


Why would anyone take them serious then. If anything, this makes me more bearish. Although I tend to agree with them that money printing will likely continue.

youngman's picture

Looks like someone read their and silver going up...

Sandoz's picture

This article headline is a flat out lie. The report never calls gold a "safe asset." In fact, the report states, "demand for some noncredit instruments, such as gold, is largely driven by perceptions of its store of value, with less regard to its market risk." The report states that gold is "perceived" as a safe asset. Big difference there. 

_underscore's picture

So, 'perceptions' don't apply then, in bonds, currencies & equities (or any other credit instruments..) ? If that's the case, then risk has been abolished - which isn't a logically maintainable argument, imho.

Sandoz's picture

I think you misunderstand. There's a big difference between the IMF calling gold a "safe asset" and the IMF saying that others "perceive gold as a safe asset." The headline states that the IMF believes gold to be a safe asset, when in reality the IMF has simply observed that others believe gold to be a safe asset. In other words, the IMF has not lent its support to the idea that gold is a safe asset. In fact, the IMF seems to indicate that the perception of gold as a safe asset may be misguided because it ignores market risk. 

Zero Govt's picture

and we all know those bunch of turkeys (crones) at the IMF know all about "market risk"

cushy job, not a budget cut in sight since recession (Depression) hit 4 years ago, revolving door career in banking etc etc

_underscore's picture

Yes I see your point Sandoz, but the IMF could never advocate a named asset, just as it doesn't name the credit instruments by name (e.g. it doesn't say either that US treasuries are safe or otherwise).

As gold can't be 'named' without identifying it, they must qualify their statement - in this case by using the passive case in the third person. A bit like a lawyer in a court of law emitting a statement - even if that is ruled out of order, it can't (actually) be un-heard by those who heard it.

Sorry to sound pedantic, but I think the august IMF pays clever people lots of money to word their statements to express an exquisitely precise meaning and subsequent interpretation.




Catullus's picture

Those govvies are safe as long as they're going up. Of course there's not much more up to go.

What I think they're saying is that 2007 is repeating in that banks are running out of "safe" assets to lever off of. They'll set this up as the banks "starving" for more treasuries to lever off of. This is the nature of the relationship between fractional reservists and the governments.

Temporalist's picture

Eldorado Gold Corp. (EGO) said it plans $1.95 billion of development spending over the next five years, including more than $1 billion for new-mine development in Greece

engineertheeconomy's picture

Immigration is what happens to the value of your wages and assets every second of every minute of every day they keep devaluing the paper its valued in by printing more and more of it.

Gold and the other precious metals are the only assets besides arable land that do not experience continual immigration of value.

When's the best time to buy precious metals?

When it's still on the shelf.

Once it leaves the shelves, good luck trying to get it at a reasonable price

Youri Carma's picture

The Bizarro Plunge Protection Team (PPT) wanted to create the Illusion for the average msm reading man on the street that gold is in a declining trend .

In order to do that you need lower lows but also lower high’s. People who are in the know about this blatant gold manipulation wondered why they bashed the market as they did lately with too much force at once? It is because they needed the lower low to create that illusion.

But it seems that they’ve partly failed now because we just had an higher high than before. See this 60 days gold price chard