Monday, 23 February 2009


The news from India recently was that:
"With the International Monetary Fund (IMF), the third largest official holder of gold, all set to sell around 400 tonnes of gold to fund changes to its financing base, the bullion market is set to witness a flurry of activities in the coming months.

Even though there were speculations about IMF’s going ahead with the plan, this week the fund clarified that it does not intend to alter plans to sell over 400 tonnes of gold.

According to IMF, a recent surge in IMF lending to countries facing balance of payments crises related to the global economic slowdown and financial turmoil has led analysts to question whether the Washington-based institution will proceed with the plan.

The sale is expected to hit the gold price, which is at the peak now. Following the recession, gold prices have soared to new heights as safe haven buyings increased."

Meanwhile GATA reported that:
"A report from a research organization in London, VM Group, today raised speculation that the International Monetary Fund may no longer need to sell its gold reserves to raise money, what with the IMF making loans again to bankrupt countries and hoping to earn interest from those loans."

"But anything about IMF gold sales is likely to be disinformation, insofar as the evidence is that the IMF has no gold at all, only the most tenuous claim on the gold reserves of some of its member nations, and insofar as China, to diversify its foreign exchange reserves, probably would buy, in an off-market transaction, any and all IMF gold offered for sale. Indeed, given the secrecy that envelops official gold reserves, any gold that is really under the IMF's control or influence well may have been transferred or irrecoverably leased already.

In any case, gold investors should worry about IMF gold no more than they worry about rogue asteroids and the expiration of the Mayan calendar on December 21, 2012. Whatever the IMF does, GATA plans to continue using the Gregorian calendar, and the financial press being what it is, we manage to cope with plenty of asteroids every day. "

You can read VM's report here.

So what does this all mean for the price of gold? Has it peaked? Is it set for an upcoming fall? I don't know about the next few months but I can only see gold being more expensive in 2 years than it is now.

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