Sunday, December 26, 2010


The IMF's secrecy regarding the gold it holds and its repeated announcements related to the sale of the same amount of gold have led many into the radical belief that, actually, it does not own any gold at all. Their argument goes as follows: it is one thing to have physical gold in your reserves and it's a completely different thing to have claims to the gold of central banks worldwide, which, as members of the IMF, have to contribute to its lending pool. The central banks themselves may not have the said gold in its physical form in their vaults, but loaned somewhere. Why would IMF hide particulars about its amount of gold or its very existence? Well, to bully the market with a massive sale and keep the gold price as low as possible.
On the other hand, last year in September, IMF announced the sale of its 400 tons of gold as part of the five-year central bank gold sales agreement, in the conditions in which IMF is not a central bank. This deal involved the sale of 2,000 tons of the precious metal. This meant a decrease in gold sales from the previous deal (2,500 tons), and it also included the IMF's 400 tons. How to interpret this other than as the unwillingness of central banks to sell their gold? And the intention of giving the false impression on the gold market that there is a lot to be sold, especially if considering the inclusion of the IMF gold and the repeated announcements (over two years and a half) on the part of this institution regarding its original gold sale?
After IMF sold half of its 400 tons to India in November 2009, and the official sales of gold by central banks have almost ended (these banks becoming instead eager gold buyers), only the remaining amount of the IMF's gold has been left to be sold for the next five years.
No wonder then that by October this year, the International Monetary Fund has remained with only 32.7 tons of the 400 tons of gold bullion it planned to sell. The previous amounts were sold on the open market and not to a central bank or some significant buyer. Analysts expect this last amount to be sold by the end of this year or the beginning of next year. While this amount is by no means a large one, it raises interest because this is considered to be the last official sale of gold.
And this means the removal of the last obstacle to the steady raise in the gold price. The demand is staggering: central banks have become avid buyers of gold due to the instability and fluctuations of currencies, retail investors that buy by ounce can determine a sharp increase in the price, the Indians and the Chinese alike seem to get used to higher gold prices and need more and more jewelry and, last but not least, the industrial demand for gold arises from a vital necessity. With the production ever dwindling, what will happen with the price now, when there is no fear of any future massive gold sale on the market?
When deciding to invest in gold have into consideration buying Gold Bullion coins, which have 99.9% purity.

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