09/22/09 Baltimore, Maryland
Yesterday, we reported, with a little unease, one of the biggest gold sales in history. The IMF is looking to get rid of an eighth of its reserves — over 400 metric tons, worth $13 billion. It’d been publicly mulling it for a long time, but still… can’t be a positive for gold prices.
Today, some better news and a sign of the times, wrapped into one: China is rumored to be a buyer of the IMF’s stash for sale — maybe the only buyer.
“China will consider buying if the price is right and the return is relatively high,” a mystery Chinese central banker told Reuters. No telling just how much they’d pick up, but given its $800 billion in U.S. Treasury reserves, we’re pretty sure China can afford as much as they want.
(For some perspective, go grab one of your 1-ounce gold coins. If you had 32,149 more, you’d own one metric ton. If China completes this purchase — all 403 tons — that’ll be enough gold to fill a 8’x10’ office to the ceiling.)
“China holds just over 1,000 tons of gold in its official state reserves,” notes Byron King, who always has a finger on the gold beat. “Probably more, if you consider ‘stealth’ holdings categorized as industrial stockpiles. If China buys up to 400 tonnes of gold from the IMF, it’ll increase China’s reserves by 40% in one fell swoop. (And stick the IMF with a bunch of depreciating dollar assets.)
“Will an IMF gold sale to China affect prices? If done correctly, no — or not much, in the short term. Because if done correctly, it’ll happen quietly… there won’t be any announcements beforehand, and we’ll only find out about it when the IMF and China next report their gold holdings. It’s not like any Chinese trucks will be showing up at the mines and refineries taking ‘current’ production. That’s exactly the way that the Chinese want this to happen.
“Still, it’ll dramatically increase China’s gold holdings, strengthening the country’s long-term monetary hand. China does NOT want to see the world go to a nondollar ‘gold-like’ standard… not yet.
“Because China does not have enough gold in its vaults… not yet!
“On that point, they’re working on it. It’ll take time. It’s a long-term play, a long-term strategy. That’s why investors have to keep an eye on the long term and buy gold and mining shares now… for the future of inflation, and as the wheel of history turns toward China.”
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this will have negligible impact on gold prices and china would be stupid not to take the whole enchilada….that paper crap they have in their vaults is growing moldy and who would want pleather when you can have the real thing?
on the other hand i will not believe the sale will occur until i see it….the imf has been trotting out this nonsense for years and never acts…
of course the real question is why now and for what reason….i don’t believe any of the stated reasons…i think there is some elaborate need to rearrange gold reserves to prevent a comex default but can’t put together the scenario….
and why sell at a discount? yes an open market dump might suppress prices for a while so why not grant it anyway? but that would be a transitory effect….
there is more to this story than meets the eye.
well i have answered my own question….the fed / treasury axis of evil told the imf to sell gold to suppress its price…apparently talk and threat won’t do it this time around so there just may be a real sale…
the gold cartel is probably under water in a big way on their gold shorts so the chinese talk of buying at a discount is supposed to depress gold prices to let them unwind their positions with minimal loss if not profit…
the chinese may double cross and swallow the gold without permitting the price decline…
and that boys and girls is my tale of tin for today….i think it is much closer to the truth than any other explanation….
why would the imf need to sell gold to raise money? it’s a farce….they could borrow the money against gold collateral or ask the chinese to pony up the money to give them an opportunity for greater prestige and control in international political finance – something they would love dearly….
no my friends, this sale is all about price suppression….