IMF gold sale: China not a realistic buyer

Weiss

Said officals yesterday

Today's a different day, apparently:
Pravda reports China & India to buy IMF gold

roadrunner

China may not be a realistic buyer depending on whether the IMF gold is legit or not. It just may not exist. If it's just paperwork accounting that needs to be cleaned up because the gold was leased/sold long ago then the IMF will want the "gold" to stay in the hands of a member storage nation such as India. Since China is not designated as an IMF storage nation they would have to keep their gold in another country such as India. If it were me, this would not fly. China can be a very realistic buyer assuming all these hurdles are cleared.

Since China is a non-storage country for IMF gold they will no doubt want every bar assayed and checked for accuracy (ie no tungsten). But how can it be assured that those same bars will not somehow be replaced over time with "other" bars? Will China be able to "visit" the gold periodically to verify things remain on the up and up? In the scheme of things 191 tons of IMF gold is almost nothing compared to China's $2 TRILL in currency reserves. They can accumulate hundreds of tons of gold per year through other means such as scrap gold purchases (ie $cash4gold), mining outputs, etc. And they can do all that while keeping the gold in their hands.

roadrunner

CaptHenway

I see it's tinfoil hat season again.........

carew4me

1jester

<< <i>I see it's tinfoil hat season again......... >>



Captain, why are you always so quick to dismiss these possibilities, or the logic behind them? It seems you have exceptionally strong faith, even blind faith.

Metalsman

IMF gold sale: China not a realistic buyer



Ancient Chinese Secret... Pretend not to be intrested then when no one wants.... me buy at cheap price! me very happy and more rich!


I'd bet the Chinese DO buy if its for sale and is physical.

CaptHenway

<< <i>

<< <i>I see it's tinfoil hat season again......... >>



Captain, why are you always so quick to dismiss these possibilities, or the logic behind them? It seems you have exceptionally strong faith, even blind faith.

>>



See the above comment about China taking delivery of the bars and testing them, which would be a prudent thing to do, but then suggesting that even if China had possession of the bars it would not know in the future if the bars had been switched or not.

That is paranoia.

TD

roadrunner

See the above comment about China taking delivery of the bars and testing them, which would be a prudent thing to do, but then suggesting that even if China had possession of the bars it would not know in the future if the bars had been switched or not.

You misunderstood what I wrote. My second paragraph referred to the situation where China bought the IMF gold but didn't take physical possession since it remained in IMF vaults. That's not an impossible situation since China also owns GLD shares (and hence has claim on GLD gold) but does not have that gold in their possession.

If the IMF allows China to take delivery (they might not) they will no doubt test them. And once in their control and tested that gold is good to go for as long as they own it. But if China wants the gold with the stipulation that it remains under an IMF-approved storage nation (ie India, etc.) then they of course they have no way to prove down the road that the gold "allocated" to them stays there/remains untouched/remains unaltered/doesn't get swapped out with tungsten bars/etc. If allowed they could take part in verifying the bars and see them in the IMF approved vault. But that in no way assures anything down the road. Paranoia? No. Common sense? Certainly.

If China cannot take physical possession of the gold I seriously doubt they would go through with such a transaction. India already had "their" 203 tons of IMF gold in their vaults (or at least the paper IOU's pointing to where the gold once resided). No problem for India as nothing changed in the vault. Just a paper shuffle.

roadrunner

CaptHenway

<< <i>See the above comment about China taking delivery of the bars and testing them, which would be a prudent thing to do, but then suggesting that even if China had possession of the bars it would not know in the future if the bars had been switched or not.

You misunderstood what I wrote. My second paragraph referred to the situation where China bought the IMF gold but didn't take physical possession since it remained in IMF vaults. That's not an impossible situation since China also owns GLD shares (and hence has claim on GLD gold) but does not have that gold in their possession.

If the IMF allows China to take delivery (they might not) they will no doubt test them. And once in their control and tested that gold is good to go for as long as they own it. But if China wants the gold with the stipulation that it remains under an IMF-approved storage nation (ie India, etc.) then they of course they have no way to prove down the road that the gold "allocated" to them stays there/remains untouched/remains unaltered/doesn't get swapped out with tungsten bars/etc. If allowed they could take part in verifying the bars and see them in the IMF approved vault. But that in no way assures anything down the road. Paranoia? No. Common sense? Certainly.

If China cannot take physical possession of the gold I seriously doubt they would go through with such a transaction. India already had "their" 203 tons of IMF gold in their vaults (or at least the paper IOU's pointing to where the gold once resided). No problem for India as nothing changed in the vault. Just a paper shuffle.

roadrunner >>



I did not in my wildest dreams consider a scenario wherein China would buy the gold but not take physical possession of it. You seem to agree with that in your last paragraph here.

TD