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New IMF transparency rules likely prompted change in U.S. gold report

Section: Daily Dispatches

2a CT Friday, October 26, 2007

Dear Friend of GATA and Gold:

The U.S. Treasury Department's acknowledgement of loans and swaps of gold from the U.S. gold reserve, disclosed last week by James Turk of the Freemarket Gold & Money Report, appears to have been prompted by the International Monetary Fund's adoption in May of stricter rules for financial transparency for member nations.

The revisions to the IMF's fiscal transparency manual were adopted on May 8, seemingly without any announcement except for this brief preface on the IMF's Internet site:

GATA long had complained that IMF rules allowed member nations to count leased and swapped gold as gold still in the vaults of their treasuries and central banks. But the IMF agreed to consider tightening the rules when the issue was pressed by Neal R. Ryan, then vice president and director of economic research for New Orleans coin and bullion dealer Blanchard & Co.

The revised manual, posted at the IMF's Internet site here -- -- appears to require more specific accounting for gold reserves, declaring on Pages 74 and 75:

"Financial assets consist of financial claims that entitle the government to receive one or more payments from a debtor, as well as monetary gold and
special drawing rights. Financial assets to be reported include cash and cash equivalents; other monetary assets, such as gold and investments; and loans and advances.

"Additional breakdowns should be provided within each category of financial asset. For example, investments might be broken down into direct marketable securities, equity investment in private companies, portfolio investment in private companies, and investment in international institutions. Loans and advances receivable might be broken down by sector (e.g., agricultural loans, student loans, and housing loans), and within sector by major loan programs.

"Foreign exchange reserves held by the central bank should not be reported as part of the central government statement of financial assets for fiscal policy purposes. They are generally held to provide import cover and for possible exchange market intervention, although it is acknowledged that in some countries foreign exchange reserves have been run down as a matter of central government policy for other purposes, including debt repayment, even when held by an independent central bank.

"Foreign exchange reserves should, however, be reported as part of other transparency requirements (i.e., in the context of monetary or statistical standards), generally by the central bank.

"Any special characteristics of financial assets, such as being secured against a debt or other specific liability, or any restrictions on the use of an asset or the income deriving from it, should be noted as memorandum items. [Emphasis added.] Any financial assets excluded from reporting should also be noted."

The acknowledgement of the need to distinguish between gold in the vault and leased ("deposited") and swapped gold began to appear in the Treasury Department's weekly U.S. International Reserve Position report a few days after the IMF adopted the revisions to its fiscal transparency manual, on May 14. The 13th line of the Treasury report, recording gold reserves, contained this new language parenthetically: "including gold deposits and, if appropriate, gold swapped."

The Treasury's May 14 report can be found here:

But the Treasury Department's new reporting form fails to comply with the new IMF rules, since it still does not distinguish unencumbered gold from encumbered gold, gold on deposit and gold swapped, even as there would be no need for the new language in the reporting form if the Treasury had not already placed gold on deposit somewhere or had not swapped gold.

So a lot remains to be done before central banks come clean about their gold reserves. GATA aims to press the Treasury Department about this in a formal and legally demanding way in coming days.

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

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