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John Embry: More on gold manipulation
IMF Says Limited Gold Sale
Could Be Accommodated
By Lesley Wroughton
Reuters
Friday, April 1, 2005
http://www.reuters.co.za/locales/c_newsArticle.jsp?
type=businessNews&localeKey=en_ZA&storyID=8057598
WASHINGTON -- A small amount of phased gold sales from the
International Monetary Fund's stockpile to fund debt relief for poor
countries could be handled by the market, according to a report by
the multilateral lender obtained by Reuters on Thursday.
The report, however, cautions that any plan to sell some of its
103.4 million ounces of gold reserves would have to be communicated
clearly to markets and should not be disruptive.
Finance chiefs of the rich Group of Seven nations asked IMF Managing
Director Rodrigo Rato last month to report by April on a British
plan for using IMF gold reserves to write off debts of the fund's
poorest borrowers.
The report, prepared for the next G7 meeting in mid-April in
Washington, suggests an overall sale of about 13 million to 16
million ounces, which could be accommodated without significant
difficulty, particularly if it is spread over a reasonable period.
Prepared by the IMF's finance department, the report said use of the
fund's gold holdings could generate additional resources for debt
relief.
But it cautioned the fund's Articles of Agreement significantly
limited how the gold stocks can be used. Any decision to sell the
gold would require support near universal support of the IMF's 184
member countries.
The United States, the IMF's biggest shareholder, has already staked
its position on gold sales, saying there is no need to sell some of
the gold, since poor countries owe only a small portion of their
overall debt to the IMF.
"We instead recommend focusing our energies on improving the
effectiveness of IMF engagement in low-income countries," U.S.
Treasury spokesman Rob Nichols said on Wednesday.
The IMF report said there were three ways to finance debt relief,
including through new bilateral grant contributions, by using all or
some resources set aside for low-income countries, and new gold
sales.
Still, it warned that as a major holder of bullion, the IMF needs to
be careful as how its actions will affect the gold market and
producers.
It asserted that any disruption of the market should be avoided.
IMF shareholders agreed in December 1999 to an off-market gold
transaction of up to 14 million ounces to held finance a global debt
initiative for poor countries.
Any fresh sale would first need the consent of the U.S. Congress,
which together with gold producers opposed the 1999 sale.
The IMF report said that since 1999, the market price of gold had
risen and there had been major changes in the structure of the
market. It pointed to the signing of a Central Bank Gold Agreement
in September 1999, which ensures more orderly sales of gold by
central banks.
The report said a decision would have to be made on whether to sell
the IMF's gold through placements in the market via intermediaries
or through direct sales.
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