Best of the Week
Most Popular
1.Gold Price Trend Forecast, Where are the Gold Traders? - Bob_Loukas
2.Stocks Bear Market of 2017 Begins? Shorting the Dow At its Peak! - Nadeem_Walayat
3.Betting on President Trump Leaving Office Early, Presidency End Date - Betfair Market - Nadeem_Walayat
4.Why Stock Market Analysts Will be Wrong About 2017 - Clif_Droke
5.Is This The Best Way For Investors To Play The Electric Car Boom - OilPrice_Com
6.Silver Price 2017 Trend Forecast Update - Video - Nadeem_Walayat
7.Gold Price Set For Very Bullish 2017, Trend Forecast - Austin_Galt
8.10 Things I learned From Meetings With Trump’s Transition Team - - John_Mauldin
9.How Investors Can Profit From Trumps Military Ambitions - OilPrice_Com
10.Channel 4 War on 'Fake News', Forgets Own Alt Reality Propaganda Broadcasting - Nadeem_Walayat
Last 7 days
Gold and Silver Weekly Update - 21st Feb 17
US Dollar and Gold Battle of the Cycles - 21st Feb 17
NSA and CIA is the Enemy of the People - 21st Feb 17
Big Moves in the World Stock Markets - Big Bases - 21st Feb 17
Stock Market Uptrend Continues - 21st Feb 17
Brent Crude Oil Price Technical Update: Low Volatility Leads to High Volatility - 20th Feb 17
Trump’s Tax System Could Spark The Wave Of Self-Employment - 20th Feb 17
Here’s How to Stay Ahead of Machines and AI - 20th Feb 17
Warning Signs Of Instability In Russia - 20th Feb 17
Warning: This Energy Investment Could Wreak Havoc On Your Portfolio - 20th Feb 17
The Mother of All Financial Bubbles will be Unimaginably Destructive when it Bursts - 19th Feb 17
Gold’s Fundamentals Strengthen - 18th Feb 17
The Flynn Fiascom, the Trump Revolution Ends in a Whimper - 18th Feb 17
Not Nearly Enough Economic Growth To Keep Growing - 18th Feb 17
SPX Stocks Bull Market Continues to make New Highs - 18th Feb 17
China Disaster to Trigger Gold Run, Trump to Appoint 5 of 7 Fed Governors - 18th Feb 17
Gold Stock Volume Divergence - 17th Feb 17
Gold, Silver, US Dollar Cycles - 17th Feb 17
Inflation Spikes in 2017, Supporting Gold Prices Despite Increased Odds of March Rate Hike - 17th Feb 17
Roses Are Red... and So's Been EURUSD's Trend - 17th Feb 17
Gold Trade Note Sighted - 17th Feb 17
Gold Is Undervalued Say Leading Fund Managers - 17th Feb 17
NSA, CIA, FBI, Media Establishment 'Deep State' War Against Emerging 'Trump State' - 16th Feb 17
Silver, Gold Stocks and Remembering the Genius of Hunter S. Thompson - 16th Feb 17
Maps That Show The US’ Strategy In Asia-Pacific - 15th Feb 17
The Trump Stock Market Rally Is Just Getting Started! - 15th Feb 17
Tesco Crisis - Fake Prices, Brexit Inflation Tsunami to Send Food Prices Soaring 10% 2017 - 15th Feb 17
Stock Market Indexes Appear Ready to Roll Over - 15th Feb 17
Gold Bull Market? Or was 2016 Just a Gold Bug Mirage? - 15th Feb 17
Here’s How Germany Buys Time From China - 15th Feb 17
The Stock Trader’s Actionable Guide to Trump - 15th Feb 17
Trump A New Jacksonian Era? The Fourth Turning (2) - 14th Feb 17
Stock Market Yet Another Wall Street 'Witch's Brew' - 14th Feb 17
This Is Why You Don’t Own A Lot Of Stocks - 14th Feb 17
Proposed Tax Reforms Face Enormous Headwinds - 14th Feb 17

Market Oracle FREE Newsletter

State of Global Markets 2017 - Report

IMF To Sell Gold…Again

Commodities / Gold & Silver 2009 Sep 19, 2009 - 01:15 PM GMT

By: Mac_Slavo

Commodities

For the third or fourth time in the last couple of years, the International Montery Fund has indicated that it will begin selling up to 400 tons of gold. While we’re not sure if the IMF will actually carry through this time, or if they are simply sending out press releases again now that gold is over $1000 an ounce in an effort to put pressure on the price, this seems to be the first time that the IMF has set a definitive date for the sales to begin. According the the IMF press release, the start date for gold sales is September 27, 2009. Under the agreement approved by the IMF, they can off load a total of 400 tons per year (they have roughly 3200 tons of gold available). In order for the IMF to be able to off load the gold, the US Congress would need to approve of the sale, which they did in June of 2009.


Inquiring minds are asking whether or not this gold sale was approved as a way to appease China because of a falling US Dollar, new trade restrictions recently instigated by the Obama administration, and China’s new policy shift that gives Chinese companies the option to default on futures contracts.

The IMF claims that the gold sale will not hit retail markets very hard and that the price of gold for retail investors should not be affected too much. One must wonder, though, that with 400 tons of gold hitting the markets, might there be a slight effect on the underlying price of gold? Chinese companies, and major international players like Barrick Gold, stand to lose billions on short futures contracts they were using to hedge some of their gold.

Maybe the sale will not affect the price of gold to the downside. But, it isn’t out of the realm of possibility. It’s obvious that the Chinese are making significant moves into gold. The idea is to buy low and sell high — and with 400 tons of gold hitting the market, we could see a decline in the price of gold temporarily, giving the Chinese an opportunity to save billions of dollars on gold purchases. At the same time, with lower prices, the Chinese can avoid getting hammered on their short position on the COMEX.

In addition, two US banks (names unknown, but some speculate JP Morgan is one of them) hold a significant short position in gold as inidcated in Got Gold? (BullionVault.com):

As of Tuesday, September 1, with gold then at $955.90, the three US banks with reportable futures positions held a total of 509 contracts long gold and a total of 75,550 contracts short gold for a total net short position of 75,041 Comex Gold Futures 100-ounce contracts. That was with a total open interest of 384,703 contracts open. As shown below in the Gold Commitment of Traders (COT) section, all commercial traders as a group (all 48 of them) reported a net short position of 216,708 contracts the same day.

Yikes! Someone stands to lose a ton of money if the price of gold doesn’t come down a little bit, no? Given the recent actions of governments the world over and quasi-government organizations, it is pretty clear the retail investors are the bottom of the barrel when it comes to regulations and fair play. Perhaps the big banks and other large interested parties need a little bit of a bail out in the gold market. It looks like the IMF is ready to oblige.

Again, it’s hard to say if the price of gold in the retail sector will be affected by this move, considering most of the IMF gold is supposedly slated for direct central bank purchase. Even if it is affected, however, those holding core gold positions for the long run shouldn’t even bat an eye. Short-term manipulation of prices is standard operating procedure these days. In the long-term, however, nature will take hold.

By Mac Slavo

http://www.shtfplan.com/

Mac Slavo is a small business owner and independent investor focusing on global strategies to protect, preserve and increase wealth during times of economic distress and uncertainty. To read our commentary, news reports and strategies, please visit www.SHTFplan.com .

© 2009 Copyright Mac Slavo - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but


© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife