Confirmation Of Chinese IMF Gold Purchasing Intentions?

Many have speculated, but so far there have been no real facts. Until now - Pravda quotes Russia FinMarkets news agency, which has said that Chinese officials have confirmed an interest in purchasing the 191 tons of IMF gold currently on the block. The IMF, which will likely see a significant funding need shortly as it commences to bail out PIIGS by peripheral PIIGS, is likely running out of time with gold sale posturing and will need to find a purchaser who can take the entire amount asap. Even as the agency has already started to expand its domestic funding capacity via bank lines, the total amount could easily be greater than capital that the IMF has access to which could force the IMF's hand to transact swiftly. And China fits just the profile for a distressed buyer of such a sizable amount. Should the Finmarkets information be credible, look for the price of gold to spike following confirmation of Chinese purchasing interests.

From Pravda:

China has confirmed the intention to purchase 191.3 tons of gold from the International Monetary Fund at an open auction, Finmarket news agency said.


The IMF announced an intention to sell 403.3 tons of gold in accordance with the adequate decision made by the board of directors of the fund in September of 2009. India, Mauritius and Sri Lanka purchased about 212 tons of the amount at the end of 2009. India purchased most – 200 tons.


China’s interest in international trade is connected with the development of the nation’s economy, as well as with the growing consumer demand in the country.


“Chinese officials have confirmed previous announcements from IMF experts and said that the purchasing of 191 tons of gold would not exert negative influence on the world market. China is interested in the development of the domestic consumer market,” the agency reports.

Keep in mind that the 191 tons would generate about $7 billion in cash for the IMF. According to the World Gold Council, at December 31, 2009 the IMF was in possession of just over 3,000 tons of gold. We expect that as the European dominos accelerate their reintroduction with gravity, much more of this stash will end up having to be sold, as globalized union after union slowly disappears before fully blow sovereign defaults commence in earnest.

h/t Steven