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(Huge?) gold sale...
RBinTex
Posts: 4,328 ✭
Pressuring gold prices, IMF moves to sell 12% of holdings
3:38p ET April 8, 2008 (Market Watch)
NEW YORK (Market Watch) -- The International Monetary Fund said it would sell more than 14.2 million ounces of gold, currently valued at more than $13 billion, and cut substantial costs as part of an efficiency drive.
The news helped pressure the price of gold Tuesday on the New York Mercantile Exchange. The benchmark futures contract for gold finished at $918 an ounce, down $8.80, or 1%. See Metals Stocks.
Some gold analysts say the IMF sale, if approved, should be readily absorbed by the market.
The IMF, with 185 member countries, aims to promote monetary cooperation, foster economic growth and employment, and provide temporary help to countries that have problems with their balance of payments.
In a statement Monday, Managing Director Dominique Strauss-Kahn said the IMF had made "difficult but necessary choices" to close an income shortfall pegged at about $400 million by fiscal 2010 and to make the multilateral agency more efficient through a "new and sustainable income and expenditure framework."
In particular, an endowment would be created with profits from the limited sale of 403.3 metric tons of gold.
"If approved, gold sales would be conducted in a transparent manner with strong safeguards to ensure that they do not add to official sales and avoid any risk of market disruption," the Washington-based IMF said.
The proposal to sell gold faces at least two key hurdles. One is that the U.S. Congress must approve the proposal, and most member countries also will have to enact legislation to expand the IMF's investment authority.
Assuming the changes win approval and are implemented, the IMF's income model would be based largely on generating funds from various sources rather than relying on lending, the agency said.
The restructuring also includes broadening the IMF's investment authority to help it boost returns. Safeguards would be put in place to ensure that the IMF's new investments don't create conflicts of interest, the IMF said.
The new model "could generate an additional $300 million in income within a few years," the IMF said.
It also includes $100 million of spending cuts over the next three years. The Associated Press reported that the reductions would include as many as 100 job cuts.
Reuters reported that the IMF holds about 113.5 million ounces of gold, so the gold to be sold amounts to 12.5% of its holdings. Its holdings make the IMF the third-biggest official holder of the precious metal.
3:38p ET April 8, 2008 (Market Watch)
NEW YORK (Market Watch) -- The International Monetary Fund said it would sell more than 14.2 million ounces of gold, currently valued at more than $13 billion, and cut substantial costs as part of an efficiency drive.
The news helped pressure the price of gold Tuesday on the New York Mercantile Exchange. The benchmark futures contract for gold finished at $918 an ounce, down $8.80, or 1%. See Metals Stocks.
Some gold analysts say the IMF sale, if approved, should be readily absorbed by the market.
The IMF, with 185 member countries, aims to promote monetary cooperation, foster economic growth and employment, and provide temporary help to countries that have problems with their balance of payments.
In a statement Monday, Managing Director Dominique Strauss-Kahn said the IMF had made "difficult but necessary choices" to close an income shortfall pegged at about $400 million by fiscal 2010 and to make the multilateral agency more efficient through a "new and sustainable income and expenditure framework."
In particular, an endowment would be created with profits from the limited sale of 403.3 metric tons of gold.
"If approved, gold sales would be conducted in a transparent manner with strong safeguards to ensure that they do not add to official sales and avoid any risk of market disruption," the Washington-based IMF said.
The proposal to sell gold faces at least two key hurdles. One is that the U.S. Congress must approve the proposal, and most member countries also will have to enact legislation to expand the IMF's investment authority.
Assuming the changes win approval and are implemented, the IMF's income model would be based largely on generating funds from various sources rather than relying on lending, the agency said.
The restructuring also includes broadening the IMF's investment authority to help it boost returns. Safeguards would be put in place to ensure that the IMF's new investments don't create conflicts of interest, the IMF said.
The new model "could generate an additional $300 million in income within a few years," the IMF said.
It also includes $100 million of spending cuts over the next three years. The Associated Press reported that the reductions would include as many as 100 job cuts.
Reuters reported that the IMF holds about 113.5 million ounces of gold, so the gold to be sold amounts to 12.5% of its holdings. Its holdings make the IMF the third-biggest official holder of the precious metal.
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Comments
They came out with this merely as a threat to try and weaken the gold price. This is comical because they came out and said the same thing a month or two ago, and did get a slight knee jerk in the gold price. I'm just surprised Bernanke had them pull this same rabbit out of the hat again
roadrunner
<< <i>400 tons is nothing. And it's unlikely it will ever be sold. In the event it should happens it gets gobbled right up by CB's and never hits the markets for little people to buy.
They came out with this merely as a threat to try and weaken the gold price. This is comical because they came out and said the same thing a month or two ago, and did get a slight knee jerk in the gold price. I'm just surprised Bernanke had them pull this same rabbit out of the hat again
roadrunner >>
I just hope the current gold price holds until I can get the ultra high relief and buffalo fractional coins later this year.
The CB's have sold up to 50% of their gold stash over the past 15 years. None of them really wants to sell any more unless the FED or USTreasury puts the screws to them. Sort of stupid to sell an asset that keeps outpacing currencies. The Brits sold 50% of theirs for a princely $260/oz......ouch! Russia, China, India, and Brazil would be more than happy to buy that 400 tons...with accumulated US dollars or Treasuries.
roadrunner