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Jun 20, 2009

Gata Dispatches: "World Gold Council Expects No Impact From IMF Sales "

Submitted by cpowell on 07:23AM ET Saturday, June 20, 2009. Section: Daily Dispatches World Gold Council Welcomes Claritywith Regards to IMF Gold Sales Press Release via Business WireFriday, June 19, 2009 World Gold Council welcomes the news that the U.S. Congress has passed the Military Supplemental Bill, thereby finalising the process allowing the International Monetary Fund to sell 403.3 tonnes of gold in a manner that will have no impact on the smooth running of the international gold market. This process began with the Crockett Report in 2007, which recommended that the IMF adopt a new income model, including the establishment of an endowment, funded by the proceeds of limited and structured gold sales. More recently at the G-20 Leaders Summit in April of this year, heads of state proposed to use additional resources from the gold sales to provide an extra $4 billion for poor and indebted countries over the next two to three years. This will not impact either the total level or the manner of the gold sales. The IMF has stated publicly that its gold sales should be coordinated with current and future Central Bank Gold Agreements (CBGA), whereby signatories have agreed to limit their gold sales to no more than 500 metric tons annually. Aram Shishmanian, CEO of the World Gold Council, said:"We are pleased to see that the IMF's plan to sell gold in a structured and non-disruptive manner has gone through due political process without problem, which is a credit to the responsible behaviour of all parties involved in the process. These sales will not constitute any net addition to the amount of gold the market is already expecting from official-sector sources as a whole, and therefore we anticipate zero market impact. We believe this announcement, if anything, will lead to positive sentiment among market participants as it clarifies that there will be no net addition to overall gold supply. "In these times of financial instability, gold's universal role as protector of wealth has come to the fore, not least as a crucial part of reserve asset portfolios. The fact that these sales will effectively rescue the IMF from a difficult situation regarding its own finances is proof of gold's unique investment characteristics, long-recognised by central bankers and institutional and retail investors alike." Given the IMF's status as "a lender of last resort," the World Gold Council believes it is imperative that the organisation continues to hold large gold reserves and acknowledges the IMF's public declarations that "the IMF should continue to hold a relatively large amount of gold among its assets, not only for prudential reasons, but also to meet unforeseen contingencies."
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