IMF urged to use surplus gold for debt relief

Originally posted by squandered
More than 10 tonnes will greatly impact the gold price. 400 tonne would cut the price to 1/3, I think. This happened when the Swiss sold off a chunk of their holdings (nothing like 400 tonnes). Gold was under $300 p/ounce.

Mines will close down. Many closed before but these days mines are viable with small returns because of the high price. Probably half of the mines opened in the last few years will be forced to shut down and gold production will only trickle from places like Africa and New Guinea.

I must be wrong in my assumption. Declaring a sell off of 400 tonnes is suicide. Selling 10 tonnes and waiting for the price to recover is more prudent. If IMF are selling 400 tonnes like that something is afoot.

Dear squandered, where have you been ? The IMF first announced it's intention to sell a percentage of it's Gold reserves back in February 2007, and the 403 tonne proposal was ultimately approved in September 2009. The first 'sale' occured in November 2009 when the central bank of India (RBI) gladly relieved the IMF of 200 tonnes at one fell swoop, paying an average market price of $1045 an ounce USD.

Market reaction:

Gold rises on IMF gold sale to India
03 November 2009

SINGAPORE (Commodity Online) : Gold prices advanced near another record in Asian trade Tuesday mainly on reports of IMF’s 200 metric tone gold sale to India. - Full Text

They sold out by December 2010: IMF says completes 403.3 tonnes gold sales program.

Thanks to insatiable sovereign demand, this Gold never saw the open market, it simply shuffled between IMF vaults and various central bank vaults. The off-take of 403.3 tonnes by the official sector was [rightly] interpreted by the precious metals community as bullish for the price of Gold, as global central banks transitioned from traditional net sellers, to net purchasers (hoarders) in 2010.

Edit add: Central bank of India was the single largest purchaser, China didn't buy any.

reply to post by OBE1


Thanks.

I'm speaking from an experience a long while ago when it went down to $300 an ounce. How things have changed. The Swiss bank released nothing like $400 tonnes and the price took a massive fall. The fact it all reached the open market says something.

I lost about $100,000 in a gold mining company that folded. (The head of the company lost nothing).

So the USD$1.00 isn't as secure an investment as it used to be...

reply to post by squandered


Hello squandered. Global CB's were net sellers for over 2 decades under the Central Bank Gold Agreement. Then around 2007/2008 they gradually began falling short of the CBGA sales quota...ultimately shifting from net selling, to net buying, last year.

2007: Switzerland Central Bank to Sell 250 Tonnes of Gold

Sorry to hear about your loss. Not sure what company you're referring to, or when that happened, but well managed projects with decent reserves and reasonable production costs, can squeak by even in low price environments. Alternatively, a poorly managed miner can be sitting on an elephant sized deposit at record prices, and still run the company into the ground (no pun intended).

GL

Originally posted by OBE1
reply to post by squandered

 

Hello squandered. Global CB's were net sellers for over 2 decades under the Central Bank Gold Agreement. Then around 2007/2008 they gradually began falling short of the CBGA sales quota...ultimately shifting from net selling, to net buying, last year.

2007: Switzerland Central Bank to Sell 250 Tonnes of Gold

Sorry to hear about your loss. Not sure what company you're referring to, or when that happened, but well managed projects with decent reserves and reasonable production costs, can squeak by even in low price environments. Alternatively, a poorly managed miner can be sitting on an elephant sized deposit at record prices, and still run the company into the ground (no pun intended).

GL

I don't actually know what those acronyms stand for.

My loss was earlier. Around 2000

The company that went under was owned by Joseph Gutnick. They consolidated at a loss into a parent company and again to the main company which folded. I'm over it. I was young and naive.
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