The International Monetary Fund's executive board on Friday was discussing selling some of the fund's gold to provide low-interest loans to poor countries and shore up its internal finances, AP is reporting. This isn't breaking news by a long shot. News reports of planned IMF gold sales have been around for some time. In April, the G-20 agreed on the gold sale as part of efforts to provide up to $6 billion in concessional loans to low-income countries.
The IMF is planning to sell about one-eighth of its gold, the equivalent of nearly 13 million ounces, worth roughly $13 billion at current market prices.
It is still unclear whether the IMF will sell its gold in auction or let central banks from member governments buy it. China, India and Russia have expressed interest in buying IMF gold.
The IMF is the third-largest official holder of gold in the world after the United States and Germany.
OK that's the news story, now what does EPJ say is really going on?
ReplyDeleteInterestingly enough, the amount of gold (1/8th their holdings) isn't a recent decision. According to the IMF website, since early 2008 they have been following an internal policy that only allows them to sell the 403 metric tons of gold they've acquired since the late 1970s. So they're essentially selling as much gold as they possibly can right now, until the ECB's Joint Gold Statement expires in 2014.
ReplyDeleteThe IMF gold sale will have no impact on the price of gold.
ReplyDeleteI believe the sale was prompted by the same countries who will be buying the gold. This time, the U.S. could not block the sale from happening. The whole thing is simply a way for countries who hold alot of U.S. debt to get out of a few of their worthless dollars. If the sale were blocked by the U.S. , then the dollar would tank even faster then it is now doing.