You are here

Gold market wary of big IMF sales but demand remains strong

Section: Daily Dispatches

IMF Looks at Gold Sale Options for Debt Relief

By Andrew Balls, Chris Giles,
and Scheherazade Daneshkhu
Financial Times, London
Sunday, February 6, 2005

The International Monetary Fund is preparing a report on the
potential sale of a portion of its gold reserves in a move that would
help fund debt relief for poor countries but could unsettle the
markets by threatening a drop in the price of gold.

Finance ministers from the Group of Seven countries, meeting in
London at the weekend, asked Rodrigo Rato, IMF managing director, to
make proposals to the fund's shareholders at its April meeting.

The IMF values its store of 3,217 tonnes of gold at about $8.5
billion (6.6 billion) about a fifth of market value. Poor
countries owe about $11 billion to the IMF. If the IMF sold large
quantities of gold, it could finance the debts owed to it by poor
countries. An alternative option to be studied would be to revalue
the gold in the IMF's accounts. This would strengthen its balance
sheet, against which it could then write off lending to poor

But this is seen as an accounting gimmick that would do nothing to
free up real resources within the fund. Gordon Brown, UK chancellor,
who has long supported making better use of the IMF's gold, said the
agreed move was an important step towards debt relief for poor
countries, following a G7 meeting that focused on development aid and
on Africa.

Gold producing countries sensitive to its price have traditionally
opposed sales by the IMF, or by central banks. But Trevor Manuel,
South Africa's finance minister, told reporters that South Africa
would not necessarily oppose sales, as long as the process was
carefully managed. Opposition to gold sales still exists within the
G7, however. John Taylor, US Treasury under-secretary for
international affairs, said the US was "not convinced that gold sales
is a necessary way" to do debt relief.

Canada also opposed gold sales. Ralph Goodale, finance minister, said
Canada would instead be prepared to fund its share of the poor
countries' debt. An IMF official who declined to be named said the
fund would not make recommendations on the use of its gold for debt
relief but present the pros and cons of various options. "This is the
kind of thing the G7 has to find a consensus on and it is a political
decision that will require the backing of all the IMF's
shareholders," the insider said.

US scepticism in part reflects concerns that gold sales would require
congressional approval.

This might be tricky at a time when the administration is attempting
to squeeze domestic programmes. The White House will unveil its
budget for the 2006 fiscal year today, the official start of
negotiations with Congress.

The G7 communiqu repeated its statement on currencies, calling
for "more flexibility in exchange rates" where this was lacking
notably in China.

China was a guest at the meeting. Zhou Xiaochan, central bank
governor, said the renminbi was not substantially overvalued and
China would follow its own timetable for moving to a more flexible
regime, rather than being rushed by the G7.


To subscribe to GATA's dispatches, send an e-mail to:

To unsubscribe, send an e-mail to:



Free sites:
(Korelin Business Report -- audio)
(In Spanish)
(In English)

Subscription sites:

Eagle Ranch discussion site:

Ted Butler silver commentary archive:



Blanchard & Co. Inc.
909 Poydras St., Suite 1900
New Orleans, Louisiana 70112

Centennial Precious Metals
3033 East First Ave., Suite 807
Denver, Colorado 80206
Michael Kosares, Proprietor

Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
Don Stott, Proprietor

El Dorado Discount Gold
Box 11296
Glendale, Arizona 85316
Harvey Gordin, President
Office: 623-434-3322
Mobile: 602-228-8203

Gold & Silver Investments Ltd.
Mespil House
37 Adelaide Rd
Dublin 2
+353 1 2315260/6
Fax: +353 1 2315202

Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889

178 West Service Road
Champlain, N.Y. 12919
Toll Free:1-877-775-4826
Fax: 518-298-3457
620 Cathcart, Suite 900
Montreal, Quebec H3B 1M1
Fax: 514-875-6484

Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
Merrimack, New Hampshire 03054
Ed Lee, Proprietor

Miles Franklin Ltd.
3015 Ottawa Ave. South
St. Louis Park, Minn. 55416
1-800-822-8080 / 952-929-1129
fax: 952-925-0143
Contacts: David Schectman,
Andy Schectman, and Bob Sichel

Missouri Coin Co.
11742 Manchester Road
St. Louis, MO 63131-4614

Resource Consultants Inc.
6139 South Rural Road
Suite 103
Tempe, Arizona 85283-2929
Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877

Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
Dr. Fred I. Goldstein, Senior Broker

The Moneychanger
Box 178
Westpoint, Tennessee 38486
Franklin Sanders
1-888-218-9226, 931-766-6066



If you benefit from GATA's dispatches, please
consider making a financial contribution to
GATA. We welcome contributions as follows.

By check:

Gold Anti-Trust Action Committee Inc.
c/o Chris Powell, Secretary/Treasurer
7 Villa Louisa Road
Manchester, CT 06043-7541

By credit card (MasterCard, Visa, and
Discover) over the Internet:

By GoldMoney:
Gold Anti-Trust Action Committee Inc.
Holding number 50-08-58-L

Donors of $1,000 or more will, upon request,
be sent a print of Alain Despert's colorful
painting symbolizing our cause, titled GATA.

Donors of $200 or more will receive copies
of "The ABCs of Gold Investing" by Michael
Kosares, proprietor of Centennial Precious
Metals in Denver, Colorado, and "The Coming
Collapse of the Dollar" by James Turk and
John Rubino.

GATA is a civil rights and educational
organization under the U.S. Internal Revenue
Code and contributions to it are tax-deductible
in the United States.