IMF plans to sell 403 tons of Gold

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JAG's picture
JAG
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2492
IMF plans to sell 403 tons of Gold

G20 supports IMF's plan to sell 403 tons of gold

A couple years ago, I remember reading a John Mauldin article and thinking that Asia would continue to buy US treasuries forever, and the resulting US housing bubble would never come to its rightful end. Obviously, things have finally changed in that regard.

Now I wonder if the Central Banks will ever stop shorting, selling, or leasing gold. I try to identify what market forces could bring this to an end. From what I understand of it, it seems like the perfect system to keep gold prices artificially low. It must have a "flaw" in its design that will eventually bring the manipulation to an end, but I'll be damned if I can think of it. 

Any ideas out there about what could end this gold market manipulation by the central banks? Thanks for your input.

 

machinehead's picture
machinehead
Status: Diamond Member (Offline)
Joined: Mar 18 2008
Posts: 1077
Re: IMF plans to sell 403 tons of Gold

The IMF will sell gold for what? Dollars? Ben Bernanke just
added a trillion fiat dollars to the Fed's balance sheet in the past 12
months. Maybe this is the IMF-crats' twisted way of 'sterilizing' them
extra dollars. Or the trillion dollars of fiat credit which they
themselves have pledged to create --

Leaders from the world’s most powerful nations, meeting in
London yesterday, agreed to triple the money the IMF can lend to
rescue crisis-stricken nations, to $750 billion. The agency will
also get another $250 billion in Special Drawing Rights, an
overdraft facility for its 185 members.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ajGFTcW7jyh0&refer=home

Get a whiff of the Orwellian smoke-blowing in the article linked by JAG above --

The IMF has been planning to sell gold since as early as 2007 to
diversify its revenues and strengthen its balance sheet.

Bwa ha ha ha ... replacing an unencumbered metallic asset with bales of
multicoloured confetti currency -- backed by nothng but debt,
demographics and extorted promises -- is strengthening your balance sheet? Don't lie to me, suckahs.

Would you buy a used car from this nest of grinning rattlesnakes?

cat233's picture
cat233
Status: Platinum Member (Offline)
Joined: Aug 20 2008
Posts: 575
Re: IMF plans to sell 403 tons of Gold

A little IMF history and thoughts from Dr. Henry C.K. Liu from his article, The New Deal Dollar and the Obama Dollar

http://henryckliu.com/page184.html

 

IMF Reform
 
As the lender of last resort for
distressed central banks,
IMF loans are denominated in dollars. The US
contributes only 18% in funding but commands the deciding vote over the
remaining 82% contribution by all other member governments.

 
Current focus on the reform of the
International Monetary
Fund (IMF) is pinned on the hope that the world’s lender of last resort
can
contribute substantially to a recovery in 2010 from the greatest
economic
crisis in a century.  The IMF,
headquartered in Washington D.C.,
is an international organization created in July 1944 during the United
Nations
Monetary and Financial Conference at Bretton Woods,
New Hampshire. It
is charged with the
responsibility of overseeing the global financial system by monitoring
those
aspects of macro economic policies of its 185 member states that impact
exchange rates and the balance of payments. In theory, it has been
designed as
an international organization to stabilize international exchange rates
and to
facilitate the balance of payments shortfalls of member states as an
international lender of last resort.

 
The performance of the IMF during the
1997 Asian financial
crisis has since been broadly and critically condemned as having
unnecessarily
exacerbated the pain for and damage to the affected economies, with its
imposition of dilapidating “conditonalities” on debtor nations, such as
privatizing industries and slashing government spending. (Please see my
September
28, 2002 AToL article: Crippling debt and bankrupt solutions)  In 2008, faced with a shortfall in revenue
itself, the IMF executive board agreed to sell part of its gold
reserves and to
curb operating expenses.

 
The IMF hopes to at least double its
lendable resources from
$50 billion to more than $500 billion so that it is ready to help out
and
provide confidence that economies will have access to funds during the
crisis. Japan
has provided $100 billion in extra money and the European Union has
committed
EUR 75 billion. Emerging economies such as the BRIC nations, Brazil,
Russia,
India
and China,
are
expected to provide the bulk of the remaining funds.

 
IMF plans to sweeten a $100 billion
lending program
announced in October that failed to attract any borrower. The new
program of
less-restrictive loans is designed to boost the fund’s impaired
standing as an
authority in containing the global meltdown and to assuage member
nations
concerns about borrowing from a lender often seen as heavy-handed and
intrusive
in internal national policies to protect transnational lenders. IMF
loan
conditionality is being adjusted so that economic structural reforms
agreed
with a country will be monitored in a broad context. The change is also
applicable to low-income countries.

 
If successful, the new IMF program
could help many
distressed economies weather the global economic downturn. If not,
global
recovery will be delayed and the IMF will become less relevant.

 
Lending reforms will be followed by
further changes to
country representation at the Fund, with emerging markets and
low-income
countries being given a bigger voice. The April 2 G-20 summit in London
is expected to bring forward the process of reform of the quota systems
that
determines country representation.

 
Together, the G-20 represents around
90 percent of global
gross national product, 80 percent of world trade (including trade
within the
European Union), as well as two-thirds of the world's
population. It comprises 19 countries: Argentina,
Australia,
Brazil,
Canada,
China,
France,
Germany,
India,
Indonesia,
Italy,
Japan,
Mexico,
Russia,
Saudi Arabia,
South Africa,
South Korea,
Turkey,
the United Kingdom, and
the United States,
plus the European Union, represented by the rotating Council presidency
and the
European Central Bank. The Managing Director of the International
Monetary Fund
and the President of the World Bank, plus the chairs of the
International
Monetary and Financial Committee and Development Committee of the IMF
and World
Bank, also participate.


D
espite major stimulus
packages announced by advanced economies and several emerging markets,
trade
volumes have shrunk rapidly, while production and employment data
suggest that
global activity continues to contract in the first quarter of 2009.

 
Global activity is now projected to
contract by 0.5 to 1% in
2009 on an annual average basis—the first such fall in 60 years. Global
growth
is still forecast by the IMF to stage a modest recovery next year,
conditional
on comprehensive policy steps to stabilize financial conditions,
sizeable
fiscal support, a gradual improvement in credit conditions, a bottoming
of the US
housing market, and the cushioning effect from sharply lower oil and
other
major commodity prices. Such institutional optimism is not shared
broadly.

 

Michael Höhne's picture
Michael Höhne
Status: Silver Member (Offline)
Joined: Nov 16 2008
Posts: 119
Re: IMF plans to sell 403 tons of Gold

403 tons are roughly 13 million ounces. At a price near 900, that gives a "gigantic" bailout package of 11.7 billion Dollars. So what's the deal here, besides creating more attempts to control the gold price?

Ken C's picture
Ken C
Status: Platinum Member (Offline)
Joined: Feb 13 2009
Posts: 753
Re: IMF plans to sell 403 tons of Gold

 Sounds like a buying opportunity to me

 

Ken

 

investorzzo's picture
investorzzo
Status: Diamond Member (Offline)
Joined: Nov 7 2008
Posts: 1182

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