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Anybody seen the IMF's gold?
11:30a ET Wednesday, February 11, 2009
Dear Friend of GATA and Gold:
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. A Bloomberg story about the report is appended, and MineWeb's Lawrence Williams has written about the issue here:
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 (see http://www.gata.org/node/6242), 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 (see http://www.gata.org/node/6792). 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.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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IMF May Not Need to Sell Gold as Loan Demand Increases, VM Says
By Nicholas Larkin
Wednesday, February 11, 2009
LONDON -- The International Monetary Fund may not need to sell part of its gold reserves because the global economic crisis has renewed demand for the organization's loans, London-based researcher VM Group said.
The IMF's board approved a proposal in April to sell 403.3 metric tons of bullion as part of a plan to close the Washington-based lender's annual deficit. The gap had widened because of diminished income from loans to emerging markets, where economic growth had reduced funding needs. The IMF also planned "sharp spending cuts" at the time.
Loan demand now has strengthened because of the world slowdown, potentially removing any need for the organization to sell some of its gold, VM said yesterday in a report. The IMF has agreed to lend $47.9 billion to Iceland, Ukraine, Pakistan, and other countries affected by the crisis.
"The increase in loans means the fund's income will be rising too," VM said. "Given the state of the world's economy and credit markets, it is likely that outstanding loans will rise, further boosting the fund's annual income."
The IMF has the third-largest gold reserves, totaling about 3,217 tons, according to December figures from the World Gold Council. Bullion for immediate delivery traded at $917.33 an ounce as of 8:44 a.m. in London. At that price, 403.3 tons would be worth $11.9 billion.
The issue of gold sales "could be put on the back burner," VM said. "At the very least, the IMF's renewed relevance has strengthened the case of those who oppose such sales."
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