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Of course Sprott can't buy IMF gold: There isn't any!

Section: Daily Dispatches

3:20p ET Tuesday, April 6, 2010

Dear Friend of GATA and Gold:

Give credit to Vince Veneziani of Business Insider for doing something that other supposed analysts of the gold market hardly ever do: put questions to an official source. But in commentary written after he questioned the International Monetary Fund about the refusal of the IMF to sell gold to Sprott Asset Management and its CEO, Eric Sprott, Veneziani seems to think that he has shown Sprott up when he has actually shown up the IMF itself.

"We called the IMF," Veneziani writes, "to get the full story." Full story? In fact, Veneziani got only the IMF's usual evasions and failed to pursue them.

... Dispatch continues below ...


Prophecy Resource Corp. Appoints Rob McEwen to Advisory Board

Prophecy Resource Corp. (TSX.V: PCY, OTC: PCYRF) is pleased to announce the appointment of Rob McEwen to the company's Advisory Board. McEwen is a leading Canadian mining industry entrepreneur. He is the chairman and CEO of U.S. Gold Corp. and Minera Andes Inc. McEwen was the founder and former chairman and CEO of Goldcorp Inc., whose Red Lake Mine in northwestern Ontario, Canada, is considered to be the richest gold mine in the world. During his tenure at Goldcorp, McEwen transformed the company from a collection of small companies into a mining powerhouse, growing its market capitalization from $50 million to approximately $8 billion.

For Prophecy Resource Corp.'s complete statement:

"We spoke with Alistair Thomson, external relations officer at the IMF, who cleared up the matter for us. Here's the breakdown of what he told us:

"The IMF is selling gold only though a qualified agent. There is only one of these agents at the moment and due to the nature of the gold market, they won't reveal who or what that agent is."

The nature of the gold market? Exactly what is it about the gold market and government's meddling in it that requires such secrecy that the "qualified agent" can't be identified? Does the "qualified agent" get commissions or special favors or other advantages from the IMF? As an international agency, does the IMF not have some obligation to be transparent here? Of course Veneziani didn't ask any of these questions. Like most other financial writers, he accepts secrecy as the premise of government.

"The IMF is also phasing out the gold sale and does not intend to dump it all at once because to do so would disrupt markets, which is obviously not their intention."

Oh, obviously, obviously. There must be some reason other than disrupting the gold market -- that is, knocking down the gold price -- for the IMF to issue a thousand announcements and reminders in advance of every gold sale it contemplates.

"Sprott can't buy the gold directly because they [the IMF] do not deal with institutional clients like hedge funds, pension funds, etc. The only buyers can be central bankers and sovereign nations, that sort of thing."

Now why is it that the IMF sells only to central banks and other sovereign agents? Is that international law or something? Isn't Sprott's money as good as anyone else's? Or might Sprott, unlike some central bank, express dissatisfaction in public if he paid for gold and received from the IMF only a gilded certificate or two assuring him that somebody else would hold his gold for him in some place unknown to him?

"The IMF board agreed months ago how they wanted to approach the sale of the gold. Sprott is welcome to buy from central banks who have bought from the IMF, but not from the IMF directly."

Actually, the IMF suggested some weeks ago that it was contemplating making some gold sales on commercial markets as well to central banks. There was much buzz in the gold market about that, but obviously it must have been mistaken, for the IMF wouldn't ever do anything to disrupt the gold market.

"And there you have it. It's simply a matter of protocol and Mr. Sprott not adhering to it."

Yes, simply a matter of protocol. The protocol is that the IMF never puts itself in a position that might disclose that it has no gold at all, might disclose that the IMF has only the most tenuous claim on the gold reserves of its members and that its supposed gold transactions are really only bookkeeping entries whose primary purpose is indeed to spook the gold market.

Veneziani's inadvertent exposure of the IMF is headlined "Sorry, Eric Sprott, There's No Way You're Buying Gold From The IMF" and you can find it at Business Insider here:

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


Preliminary Feasibility Study Completed for Seabridge Gold's KSM Project

Study Reports Reserves of 30.2 Million Oz. Gold, 7 Billion Lbs. Copper,
133 Million Oz Silver, 210 Million Lbs. Molybdenum

Base Case Life of Mine Cash Operating Costs Estimated at $144/oz. Gold Produced
(Net of Base Metal Credits)

Toronto -- Seabridge Gold Inc. has announced results from a National Instrument 43-101 compliant preliminary feasibility study of its 100-percent owned KSM project in northern British Columbia, Canada. The study was prepared by Wardrop, a Tetra Tech company, a major international engineering and consulting firm.

Seabridge President and CEO Rudi Fronk says, "The study confirms that the KSM project now hosts the largest gold reserve in Canada and one of the largest in the world. KSM is projected to provide an extraordinary mine life of more than 35 years with estimated cash operating costs well below the current average of the major gold producers. Estimated capital costs are in line with those of comparable, large-scale, undeveloped gold-copper projects and KSM has the advantage of being located in a low-risk jurisdiction."

For the complete Seabridge Gold statement:

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