Central banks must be running low: IMF talks gold sales again

Section:

3:57p ET Wednesday, January 31, 2007

Dear Friend of GATA and Gold:

The central banks must be running low on gold, for today the International Monetary Fund piped up with another gold-selling scheme, maybe because the IMF's 3,217 tonnes of gold can be considered the gold of no one in particular and so may be easier to part with.

Just perfectly, the IMF committee whose report recommends selling gold was chaired by Andrew Crockett, president of JPMorgan Chase International, the great gold shorter for the central banks, and formerly director general of the Bank for International Settlements, the great coordinator of the central bank gold-price suppression scheme, as acknowledged in June 2005 by the BIS' own William S. White, head of the bank's monetary and economic department:

http://www.gata.org/node/4279

It's not hard to tell which is the more powerful institution: the BIS, any of the central banks that are members of the BIS, the IMF, any of the governments that are members of the IMF, and JPMorganChase. In the IMF's statement today MorganChase is given practically sovereign status:

http://www.imf.org/external/np/sec/pr/2007/pr0718.htm

Let's hope the IMF sells ALL its gold, not just a few hundred tonnes, and is emulated by all the central banks. When they're out of the market, there won't be enough zeroes to put behind the gold price.

Bloomberg's story about the IMF statement is appended.

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

* * *

IMF Should Sell Some Gold
to Cover Losses, Panel Says

By William McQuillen
Bloomberg News Service
Wednesday, January 31, 2007

http://www.bloomberg.com/apps/news?pid=20601068&sid=aGA4cC3CPQKY&refer=e...

WASHINGTON -- The International Monetary Fund should sell some gold to cover losses, said an advisory panel that includes former Federal Reserve Chairman Alan Greenspan and European Central Bank President Jean-Claude Trichet.

The Washington-based IMF could sell 400 metric tons of gold, valued at about $6.6 billion, and invest the proceeds in interest-bearing assets, the panel said in a report released today. Sales should be handled in a way that avoids "disturbances" in the gold market, a press release said.

Gold sales are part of a package of measures intended to reduce the IMF's dependence on the interest it earns from loans to member nations. The fund projects a loss of about $102 million this fiscal year after countries including Brazil and Argentina repaid loans early.

"If adopted, the measures would set the fund's finances on a sustainable basis, and ensure a solid foundation for the fund's important role in the international community," panel chairman Andrew Crockett, president of JPMorgan Chase International, said in a statement.

The IMF would earn about $195 million a year by selling a portion of its total holdings of 3,217 metric tons and investing the proceeds, the report says.

Gold futures for April delivery rose $6.80, or 1.1 percent, to $657 an ounce at 1:06 p.m. on the Comex division of the New York Mercantile Exchange. Prices earlier reached $660.70 an ounce. Before today, gold was up 14 percent in the past year.

The contemplated volume of gold sales is "huge, but it's going to be sold piecemeal over years," said Michael Guido, director of hedge-fund marketing at Societe Generale SA in New York. "It's not going to have an immediate impact on prices."

IMF Managing Director Rodrigo de Rato, who appointed the eight-member advisory panel, has already started discussing the recommendations with the fund's executive board, according to the press release. Formal proposals will be submitted in coming months, it said.

Gold sales would require the approval of member countries including the United States, which has a veto over IMF decisions. A Treasury Department spokesman couldn't immediately be reached for comment.

The IMF has sold gold before. The most recent sales took place between 1976 and 1980, when the fund unloaded 50 million ounces following an international agreement to reduce the role of the metal in the global monetary system.

The panel also recommended investing some of the money contributed by member nations, known as "quotas," broadening existing investments, and charging members for advisory services.

Founded at the end of World War II to promote global economic stability, the IMF keeps a watch on the currency, trade and economic policies of its 185 members and makes nonbinding recommendations for improvement.

The fund also provides low-cost loans to countries in financial need on the condition that borrowers undertake economic policy changes such as adjusting their balance of payments or reducing inflation.

The other members of the committee are Mohamed El-Erian, chief executive of Harvard Management Co.; South African Reserve Bank Governor Tito Mboweni; Bank of Mexico Governor Guillermo Ortiz; Hamad Al-Sayari, governor of the Saudi Arabian Monetary Agency; and Zhou Xiaochuan, governor of the People's Bank of China.

* * *

Help Keep GATA Going
GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at www.GATA.org. GATA is grateful for financial contributions, which are federally tax-deductible in the United States.