G20 Supports IMF’s Plan to Sell 403 Tons of Gold
April 3rd, 2009Via: MarketWatch:
Leaders from the Group of 20 nations Thursday endorsed the International Monetary Fund’s plan to sell 403 tons of gold to raise funds to support the world’s poorest countries.
The announcement from G20 leaders helped add pressures to Thursday’s gold trading. Gold futures fell $20.30, or 2.2%, to $905.80 an ounce in recent trading on the Comex division of the New York Mercantile Exchange. See Metals Stocks.
The G20 vowed in its statement to “use the additional resources from agreed IMF gold sales for concessional finance for the poorest countries.” Read more on G20.
The endorsement suggests that the IMF’s gold sales plan is likely to be approved by its member countries later this year.
The IMF has been planning to sell gold since as early as 2007 to diversify its revenues and strengthen its balance sheet. But the plan needs to be approved by an 85% majority vote from its 185 members.
The U.S., which has 17% voting power in the fund, essentially holds veto power. The U.S. government has informed the IMF that Congressional authorization by law is required before it is able to support the plan.
The U.S. Treasury announced last year that it will seek authority from Congress. The U.S. administration has seemed supportive, both for expanding the IMF’s role as well as helping its long-term funding challenges. This makes the proposed IMF gold sales much more likely.
Naturally they´ll be selling all that volume from at least 10% off the highs and probably closer to 20%. Following that will probably be an extremely strong upleg. So the IMF will get its cash and give an all clear signal to hedge funds ect. establish long positions in the 800. If there´s a return to some kind of loose gold-standard, such as SDR collateral requirements, then they´ll have to buy the stuff back at like $50k per ounce. That´s a number iTulip calculated based on aggregate money supply relative to gold supply. Of course all the new SDR-based debt they´ll use to consolidate their standard will pay for it, sending the price even higher. By this time, unfortunately, it won´t be possible to buy grocercies with a Krugerand and escape unscathed, either due to draconian measures such as a massive capital gains tax on gold, or due to general chaos, or both.
“Leaders from the Group of 20 nations Thursday endorsed the International Monetary Fund?s plan to sell 403 tons of gold to raise funds to support the world?s poorest countries.”
Oh, isn’t that so generous of them?! But, in exchange for what? The poor countries’ resources to pay for the new debt, of course. Nothing new there.
And here’s Jim Sinclair’s posting on the IMF gold sales:
Anti-Gold Promotion Of IMF Gold Sales NOT Negative To Gold
http://jsmineset.com/index.php/2009/04/02/anti-gold-promotion-of-imf-gold-sales-not-negative-to-gold/
Anti gold promotion of IMF gold sales as negative to gold is simply rank STUPIDITY, without historic references, and totally wrong. There is no more I can say about that except I am 100% correct. All and every ounce they have will be consumed by other central banks and NEVER see the free market. In the 1970s this was extremely bullish for the gold market because it let major buyers in at a singular price on blocks they could not have otherwise entered in such a class manner. 2009-2012 will be similar.
Gold is headed to $1160, $1224 and $1650 and that is just for starters.
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