Is IMF trying to recover its gold by pretending to sell it?

1a ET Wednesday, May 7, 2008

Dear Friend of GATA and Gold:

As the Agence France-Presse story appended here reminds us, the International Monetary Fund may be worth its weight in gold for having accomplished years of gold-bashing publicity without having sold a single ounce -- indeed, as GATA's correspondence with the IMF last month indicated, without even having a single ounce. (See http://www.gata.org/node/6242.)

As it turns out, the IMF's gold is only a claim on the gold reserves of certain of its member nations, a pledge of gold by those nations, held in official depositories in the United States, Britain, France, and India -- or maybe just in one, two, or three of those nations, since the IMF won't say exactly where its gold is, nor how much is where, only that IMF rules allow holding gold in those four nations and that the IMF's gold is counted as part of the international reserves of its member nations.

Of course the United States and Britain have been known as major custodians of foreign gold reserves, but in recent years Britain has sold the better part of its gold.

As the AFP story below notes, everybody in the IMF has agreed to the latest gold sales idea except the United States, whose delegate to the IMF cannot give the decisive concurrence without the approval of Congress, which has been sought before but not granted.

It is also a matter of record that the United States has been engaging in "gold swaps" since at least January 1995, when they were inadvertently mentioned in the minutes of a meeting of the Federal Reserve's Board's Federal Open Market Committee:

http://www.federalreserve.gov/fomc/transcripts/1995/950201Meeting.pdf

So increasingly the IMF gold sales idea may look like a scheme to provide cover for the United States to repay other Western central banks for gold that has been swapped and sold as part of their general surreptitious regulation of the currency and precious metals markets over the last two or three decades.

At least the IMF keeps insisting that its gold sales will not increase official-sector sales already planned under the Washington Agreement and will be managed so as to minimize any effect on the gold market.

Is this just another way of saying that the gold that supposedly belongs to the IMF will merely travel from one central bank vault to another without hitting the market at all?

Is the IMF's gold sales plan really just an international demand for the United States to make good on the gold it has been borrowing to rig the currency markets with, now that so many central banks are stuck with so many dollars whose value has fallen sharply and can only fall more if their holders actually try to spend them?

In any case, somebody other than the IMF is holding whatever gold the IMF claims to have. So whoever that gold really belongs to may be trying not to sell it but actually to get it back.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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IMF Moves Toward Gold Sales

From Agence France-Presse
via Yahoo News
Tuesday, May 6, 2008

http://news.yahoo.com/s/afp/20080506/bs_afp/imfbudgetinvestgold_08050621...

WASHINGTON -- The International Monetary Fund board of governors Tuesday approved a new program that calls for the sale of 403.3 tonnes of IMF gold reserves as part of a wide-ranging financial overhaul.

The plan would create an "endowment" that helps provide a steadier source of income to the international organization that has drastically scaled back on lending.

The program announced April 7 also calls for a 13.5 percent cutback in IMF spending over the next three years.

The governors approved a new investment plan to be activated after gold sales. The gold sales must be approved by the US Congress to allow the US representative to the IMF to approve the change.

"The new income and expenditure framework is expected to cover a $400 million shortfall projected in the medium term," the IMF said in a statement.

Governors from 176 of the fund's 185 member countries cast votes, with all in favor of the plan. Approval required a majority of the votes cast.

"With this decisive endorsement, the fund's members have once again demonstrated their support for reforming key components of the institution's framework, including its financial structure," IMF managing director Dominique Strauss-Kahn said.

"Together with the resounding vote last week to change the representational structure of the Fund, this vote further reinforces the legitimacy of the Fund. I thank the membership for this vote of confidence in the institution's future."

The new plan calling for the endowment requires an amendment of the fund's Articles of Agreement, which will need to be accepted by at least three-fifths of IMF members.

The sale, amounting to some 12 percent of its gold reserves, could yield around $11 billion, IMF officials said last month. This would help finance a reorganization of the institution as it seeks to survive a downturn in lending to troubled countries, its main income source.

The IMF said the plan calls for gold sales to be "conducted in a transparent manner with strong safeguards to ensure they do not add to official sales and avoid any risk of market disruption."

The organization is also in the process of sharply cutting back staff. Last week it said 591 had requested voluntary buyouts, or about one in five eligible employees, well above the number expected.

The institution, created over 60 years ago with a mission to foster global financial stability, is struggling to reinvent itself after many developing countries began rejecting its financial aid and accompanying restrictions.

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