Best of the Week
Most Popular
1.UK House Prices BrExit Crash NOT Likely Despite London Property Market Weakness - Nadeem_Walayat
2.BrExit Morning - New Dawn for Britain, Independence Day! - Nadeem_Walayat
3.LEAVE Wins EU Referendum - Sterling and FTSE Hit Hard, Pollsters, Bookies and Markets All WRONG! - Nadeem_Walayat
4.BrExit Implications for UK Stock Market, Sterling GBP, House Prices and UK Politics... - Nadeem_Walayat
5.Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast - Nadeem_Walayat
6.FTSE and Sterling Brexit Trading, Deconstruction of the EU Referendum Result - Nadeem_Walayat
7.UK Interest Rate Cut to 0.25% Imminent and More QE Money Printing - Nadeem_Walayat
8.Trading BrExit - British Pound Plunges, FTSE Stock Futures Slump on LEAVE Shock Referendum Win - Nadeem_Walayat
9.The Stock Market is Reading it Wrong! - Chris_Vermeulen
10.Breakouts Galore in Gold and Silver - Jordan_Roy_Byrne
Free Silver
Last 7 days
Elliott Wave Crash Course - 3 Ways the Elliott Wave Principle Enhances Your Trading - 28th July 16
Japan's "Helicopter Money" Play: Road to Hyperinflation or Cure Debt Deflation? - 27th July 16
Monetary Zika - The Insidious Nature of Credit Expansion - 27th July 16
Gold and Pork Bellies - 27th July 16
Silver Is Insurance Against The Worst Part Of This Depression - 27th July 16
Don’t Buy The SPX Hope Stock Market Rally! - 27th July 16
Bitcoin $650 Still in Play - 26th July 16
Deutche Bank Stock Price Crash - The EU Has Problems Far Beyond the Brexit - 26th July 16
The Forex Markets Are Getting Exciting! - 26th July 16
Underpriced Silver Is the “Rip Van Winkle” Metal - 25th July 16
Declines in Multiple Market Indexes - 25th July 16
Retailers Are Doomed as Most Americans Are Too Poor to Shop - 25th July 16
Here’s One Currency That Could Go to Zero - 25th July 16
Stock Market Top is Expanding - 25th July 16
Silver Manipulation – Because They Needed the Eggs - 25th July 16
Silver Market COT Stuns: What's Going On Here? - 24th July 16
Gold Demand Remains Stable During Sector Weakness - 24th July 16
Sernova, Diabetes and Haemophilia - 24th July 16
Russia: Tensions, Turmoil, and Western Hubris - 24th July 16
Soybean Commodity Price to Soar Again - 23rd July 16
SPX Stock Market Uptrend Continues - 23rd July 16
Gold And Silver – Debt Addiction Will Carry Precious Metals Higher, Guaranteed - 23rd July 16
Pokemon Go - How to Play, First Use, Balls, Stops, Catching Pokemon's... Great Excercise! - 23rd July 16
7 Signs That the Gold Market Remains Resilient - 23rd July 16
Basic Income in The Time of Crisis - 23rd July 16
Silver Bull Faces Correction - 22nd July 16
The Serious Warning No One’s Talking About - 22nd July 16
Stock Market Insight from Greed, Volatility, and Put/Call Ratio - 22nd July 16
What Will Happen To the Stock Market When Interest Rates Rise? - 22nd July 16
How to Escape the World’s Biggest Ponzi Scheme - 22nd July 16
Addicted to Debt - We Can’t Borrow from the Future Anymore - 21st July 16
Not Everything Is Bullish for Gold - 21st July 16
Don’t Get Sucked Back Into the Stock Market - The Big Picture Hasn’t Changed - 21st July 16
Silver – Caught Inside - 21st July 16
Forex: "The Markets Are Getting Exciting!" - 20th July 16
China Economic Troubles - Is Kyle Bass Finally Getting His Revenge? - 20th July 16
Why Lithium Will See Another Price Spike This Fall - 20th July 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Power of the Wave Principle

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