Wednesday, February 17, 2010

IMF to Begin Gold Sales on Open Market

The International Monetary Fund today announced that it will shortly initiate the open market phase of its gold sales program. This is not unexpected.

This is the second phase of the total sale of 403.3 metric tons approved by the Executive Board in September 2009. The first phase was set aside exclusively for direct, off-market, sales to official holders. A total of 212 metric tons was sold during this phase, comprising sales to the Reserve Bank of India, the Bank of Mauritius, and the Central Bank of Sri Lanka.

The total amount remaining to be sold is 191.3 metric tons. In accordance with the priority of avoiding disruption of the gold market, the market sales will be conducted in a phased manner over time.

It will follow the approach adopted by the central banks participating in the Central Bank Gold Agreement. Participants in the agreement have noted that the Fund’s sales can be accommodated under the agreed ceilings of 400 tons annually and 2,000 tons in total during the five years starting on September 27, 2009.

The initiation of market sales does not preclude further off-market gold sales directly to interested central banks or other official holders. Such sales would reduce the amount of gold to be sold on the market.

The IMF better hope they can sell good chunks off market in private transactions. I don't think the public market is strong enough, at present, to hold anywhere near these kind of sales at anywhere near the current price.

The IMF will continue to provide regular updates on progress with the gold sales.

1 comment:

  1. It's my understanding that they are prohibited from open market sales anyway so as not to disrupt the markets. See Trader Dan Comments On The IMF’s Supposed Gold Sales.

    My guess is that this will be an off market sale to one of the other banks. Most are speculating an Asian central bank, but the thought occurs to me, what if they were to sell it to Greece? Just a thought that bubbled to the surface since it's all speculation at this point. Time will tell.