G7 Approves IMF Gold Sales
February 10th, 2008Via: Reuters:
The Group of Seven rich nations on Saturday approved the sale of gold by the International Monetary Fund from April as part of a broad reform of its budget, Italian Economy Minister Tommaso Padoa-Schioppa said.
“There was an acceptance among the G7 that resources should be raised by selling gold,” Padoa-Schioppa, who is also the head of the IMF’s steering committee (IMFC), told reporters after a meeting of G7 finance ministers in Tokyo.
He said the agreement would be finalised in April and would complement spending cuts being drawn up by the IMF under its new managing director, Dominique Strauss-Kahn.
“The current gold price means a flow of income can be ensured,” Padoa-Schioppa said.
Morgan Stanley analyst Stephen Jen said the Fund held 103.4 million ounces of gold worth some $92 billion at current market prices. That was up from $23 billion just five years ago.
“The IMF is rich, if it wants to be,” he wrote in a recent note to clients, issued before the G7’s approval of the gold sales. “This is arguably a good time to consider selling some of these gold holdings and investing the proceeds in financial securities with positive yields.”
another 20 year buying opportunity?
Or the end of gold being worth buying??
:/
I don’t know any of the fine points of how all this works, but isn’t there a chance that a 50 million oz selling spree by the IMF could pretty much bottom out the market for gold for quite a while to come?
Isn’t that how this supply & demand thing usually works?
Someone toss me a clue if I’m wrong, which I hope I am…
I follow Jim Sinclair:
“Any sales of [IMF] gold have nothing to do with the market for gold, as not one ounce will ever see the free market. The buyers will be gold-poor central banks.”
http://www.gata.org/node/5988
The West has been selling gold on the way up. The IMF has periodically announced that they are going to sell. It’s been an attempt to bomb the market. The gold is flowing into strong hands. The strong-hand buyers aren’t going to sell. The more they buy, the less there is for institutions and investors in the West to buy.
Gold is underpriced. $92B. They can print this much and more in a day. China has $1T+ in reserves. They could buy it all if they wanted to. They are buying. Maybe we’ll wake up one day and hear that the Chinese have backed their currency with gold. Game over. Everyone foreigner would no encumbered with currency controls would flood into their currency.
Maybe all the other Asian nations with trade surpluses and peso dollars holding will get into the game. This is just geopolitics. Shorts, mine supply, etc. aside, in USD terms, seems inevitable that gold will be going much higher.
The IMF announcements and proposed sales and sales of Western CB gold are bullish. The gold is not going to come back to the West.