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silversurfer1
27th February 2010, 06:44
Competition for the IMF’s Gold?


By Jeff Clark, Senior Editor, Casey’s Gold & Resource Report (http://www.caseyresearch.com/crpmkt/crpSolo.php?id=169&ppref=CDD169XX0210K)

On Wednesday, Reuters reported that the Reserve Bank of India was “set to be a buyer” of the 191.3 tonnes (6.74 million ounces) of gold the IMF is selling. Although the bank won’t comment directly on the possibility, they did say, “We are closely looking at the gold market... gold is a safe bet.”
The article then quoted an unidentified official from the China Gold Association as saying, "It is not feasible for China to buy the IMF bullion, as any purchase or even intent to do so would trigger market speculation and volatility.”

But the next day, yesterday, Finmarket news agency in Russia reported that China “confirmed its intention” to buy the IMF gold. "Chinese officials have confirmed previous announcements from IMF experts and said that the purchasing of 191 tons of gold would not exert negative influence on the world market.”

So both India and China have publicly hinted they want this latest batch of yellow bars from the IMF. There’s no way to know if a competitive bid would spring up between these two countries, but...can you imagine the ramifications if one did?

When India bought 200 tonnes of IMF gold last November 3, it set off a buying spree that saw gold rise 14.2% in 4 weeks. What if this time around, a couple central banks both want the gold for sale? What if China says to India, “Not so fast, guys. We’d like to bid on that, too...” and word of that clash leaked out?

Pure speculation, of course, but competing for gold purchases isn’t a far-fetched idea. This sale is not pre-arranged; it’s an open market sale. Also, there’s only so much to go around. These two countries have only a tiny amount of their reserves in gold. Throw in the fact that central banks worldwide are already net buyers.

A pretty delicious thought, wouldn’t you say?

The gold price is mostly unchanged since the IMF announcement (down $12, or 0.1%). It’s pretty hard to make a case that IMF sales will hurt the gold price. As I said last week in my dirty jokes (http://www.caseyresearch.com/displayCdd.php?id=351) column, IMF sales tend to mark bottoms in the price and not tops. The World Gold Council reported that floor traders now consider $1,054 as a floor in the market. Why? That was the average price India paid for the 200-tonnes they bought from the IMF last fall.
Meanwhile, what is our government

main1event
27th February 2010, 08:51
China has what 2 trillion in reserves? This 191 tonnes of gold represents 10 billion dollars, which is a mere fraction of what they have in paper.

Think about all the gold in the world, most of it isnt for sale. You bet this is going to get out of hand quickly.

silverheartbone
27th February 2010, 10:10
Why the hell would participants in an AUCTION give advance notice? http://forums.silverseek.com/images/smilies/confused.gif

DaleFromCalgary
27th February 2010, 11:34
I just wish the IMF would sell the stuff already and get it over with.

Immediately after the initial announcement via the Russian news service that China was buying the gold, the price spiked. I listened to the mass media do their round-up at market close. The few commentators who mentioned gold attributed it to the Greece problem and seemed unaware of the China announcement. Since Greece has been in the news for weeks, the sudden mid-day spike cannot be attributed to that problem.

AgShaman
27th February 2010, 14:03
Perhaps India wants back into the fold....or they are hoping for a lower price.

I find it curious that India just raised import duties on Gold,Silver, and Platinum.

From 200 to 300 rupees per 10 grams of gold and platinum

From 1000 to 1500 rupees per kilogram of silver

This seems like quite a tax hike....jewelers must be real happy now?

Curiosity will not kill the C/Kats of SS nation!