When wonkish blogs suggest gold ownership as a hedge for the political idiocy [6] of the world, it is mockingly shrugged off. When the BRICs add gold, it is eschewed in a 'well, its diversification' argument. But when the bankers' bankers' bank - The IMF - starts adding Gold to its reserves to cover higher expected credit risk losses (read major devaluations of fiat currency exposure), perhaps - just perhaps - the 'rationality put [7]' we noted earlier is becoming a little more expensive in the minds of Lagarde and her colleagues. As Bloomberg News reports [8], “The Fund is facing increased credit risk in light of a surge in program lending in the context of the global crisis,” the IMF staff wrote in a report released today, adding "there is a need to increase the Fund’s reserves in order to help mitigate the elevated credit risks,” and as CommodityOnline [9] added: "The International Monetary Fund (IMF) is planning to purchase more than $2 billion worth of gold on account of rising global risks. The IMF currently holds around 2800 tonnes of gold at various depositories".
[10]
The IMF announced in February 2010 [11] that phased sales of gold on the market would be initiated shortly (after proposing the initial 403.3 ton sale in September 2009. At that time, a total of 191.3 tons of gold remained to be sold, following the sale of a total of 212 tons to three central banks during October and November 2009.
Chart: Bloomberg