Breaking News-2009.11.03
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| Date | 2009-11-3 | Source | Bloomberg | |||
| IMF Sells Gold to Central Bank of India, Netting $6.7 Billion
By Sandrine Rastello Nov. 3 (Bloomberg) — The International Monetary Fund said it is selling 200 metric tons of gold to the Reserve Bank of India for about $6.7 billion, its first sale of the precious metal in nine years. The sale accounts for almost half the 403.3 tons that the Washington-based lender in September agreed to sell as part of a plan to shore up its finances and lend at reduced rates to low- income countries. …… The transaction, which involved daily sales from Oct. 19-30 at market prices, is in the process of being settled, the IMF said in the statement. The average price in the transaction with India was about $1,045 an ounce, an IMF official said on a conference call with reporters. The lender has said it is ready to sell directly to central banks and later make transactions on the open market if necessary. The IMF official declined to say whether other central banks have expressed interest in purchases. The 403.3 tons the IMF board agreed to sell amount to one- eight of its stockpile. Gold prices reached a record of $1,072 an ounce on Oct. 14 and have gained 45 percent from a year ago. Gold futures for December delivery jumped $13.60, or 1.3 percent, to $1,054 an ounce on the New York Mercantile Exchange’s Comex division yesterday, the highest closing price for a most-active contract since Oct. 23. |
Says Kalidas….
Looks like Government of India has read my book, especially a chapter on Gold ( I had sent them a copy which was acknowledged) I have been campaigning in this column that RBI/MOF should make active market in Gold by minting gold bullion bars with the stamp of RBI Mint for sale to Indian savers. It looks like they have finally acted. To me it appears that RBI may be coming out with 5, 10, 20, 50, 100 gm and 1 kg bars with 9999 purity for sale to the Indian retail buyers and jewelry trades. Most banks may be selling gold in this form. They might be asked to make two way markets – so that the consumers are not cheated out by others. It is possible that inventories held by the banks might qualify as part of “Cash Reserve” – it should be because it is. The move also suggests that Government of India has finally decided to make a break with the dollar and diversify its holding / reserve into Gold. In future, almost all Central Banks will ask GOI whether it would be a buyer of their gold. Those who feared that large quantity of sale of gold by IMF might depress the gold prices should have second thoughts. There will be no more gold in the market. Indian Rupee will also attract lot of appeal. There will be more gold backing even if unofficially in future. Who would buy Swiss Franc when emerging strong economy like India has Rupee backed by gold? I am sure Government of India will make over 200% profits in less than two years. |
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Sir,
I realized at my folly of asking such a question when i myself calculated the tonnes of silver required to satisfy the gold purchase. RBI has 1000 tonnes of silver at end of 2005 … thats the latest figure, so its simply not possible.
Sir, I also request you to come up with an article and your targets for long term silver. One fact that bothers me is that according to the US Geological society silver will be the second metal that is going to be extinct at present rate of consumption in next 15-20 years. All easily available mines silver mines have been extracted now 70% of it comes as byproduct of other metals mining. How these facts would change the dynamics of these markets.
Regards,
Vivek, Gurgaon, India
Kalidas Says …. Saturday, November 07, 2009
Silver is an industrial metal and also a semi precious metals and money too like gold. The industrial use of metal came down due to disappearing photographic companies (Kodak, Fuji) where film roll uses silver.
US government used to own billions of ounces of Silver and was on selling spree for over 78 years. This is why many banks in Europe and Hong kong shorted this metal for years. US govt became buyer of silver for the first time in 2008, having run out of entire inventory. there is rising demand from Americans themselves who do not like gold but like silver (white skinned people love white metals/stones like diamond, silver, white pearls etc) The brown or black skinned people use gold because it contrasts with their skin and shine.
Forget US geological survey. They can not scout everything below land. if that was so scarce, silver would have had higher value than gold. Silver is available plenty below ground. It is the best conductor of electricity (better than even copper). If you have poor electronic reception, use silver joints at both ends (twisting copper wire with silver wire), and reception will improve a lot.
It will rise to minimum US$ 60 – maximum $110 per ounce. India today is the major storehouse of silver. What Americans sold found their way into India.
I am fond of silver. My father insisted on “silver glasses” to drink water. In my whole family of 5 brothers, you will find only silver glasses to serve the water. I used to have fancy for this metal, so started buying from $5 onwards to $5.20 – lowest I paid was $4.19. Whenever I went to restaurant and spend HK$ 300 to 500, I would buy at least one bar of 10 taels (375 grams;Chinese use Tael what we call Tola. but one chinese tael = 37.5 grams). I have built very large position of physical silver and will start selling only from $ 48 onwards
I disagree that there is not enough silver below ground. All copper mines have silver too (because they are in same family). Even Hindustan Copper produces silver. All copper producers have silver as their bye-product.
The people are buying gold/silver not fight the inflation – ask any Indian on the street about inflation and he will stare at you as if you are a mad man. They do not know what is inflation. The people today are buying precious metals because they have lost confidence in paper currency. That is the truth.
Vivek Dhariwal
6 Nov 09 at 10:07 PM
Dear Sir,
There was a rumor behind the India’s 200 tonnes Gold Purchase that the RBI paid in Silver reserves for it and not in $$$s.
If true, what could be the implications, i may well judge the reasons for such move.
Regards,
Vivek, Gurgaon, India
Kalidas Says …. Saturday, November 07, 2009
Gold to Silver ratio is 64. If India bought 200 tons, they have to supply 12800 tons of silver. That is, about 640 20feet containers.
Do you believe it?
Government of India is diversifying from dollar (paper) to precious metals physical asset, not from one class of precious metal to another class of precious metal. Does India have 13000 tons of silver? Where do they store it?
Vivek Dhariwal
6 Nov 09 at 9:28 AM
Kalidasji,
Most of the time analysts on CNBC or other Business channel just talk rubbish.
I am sure that sooner then later you will get call from GOI to provide more advise & insight about this complex subject. That will be your true recognition.
RBI may add more Gold.
http://economictimes.indiatimes.com/RBI-may-accumulate-more-gold-to-protect-against-a-weak-dollar/articleshow/5197028.cms
Parag, Surat
4 Nov 09 at 10:59 AM
Sir,
Today CNBC-TV18 in their 9.30PM show did mention that GOI has made a profit of approximately $300 million on its investment in gold. Kudos to your suggestion to GOI and RBI for implementing it.
Thanks
Deepak
Mysooru,India
deepak
4 Nov 09 at 10:48 AM
Some inconclusive analysis from ET on RBI Gold Purchase from IMF
http://economictimes.indiatimes.com/quickiearticleshow/5193560.cms
Kalidas Says …. Wednesday, November 04, 2009
ET and others were stunned by the turn of events. They did not see anything like this before nor could they anticipate/analyze such move. In fact, they lacked the experience to judge the events immediately.
This author has practical experience, and having written the book on this subject, could anticipate the possible reasons immediately. It will take 15 days for ET or any other newspapers/media including CNBC to analyze the effect or motive after conducting several interviews with the experts or RBI official themselves – who will not open their mouth.
I was listening to one expert on CNBC about RBI’s gold move. He said that it was surprising- and that Indians usually buy the gold ornaments ahead of Christmas! Since when Hindus, Muslims, Sikhs and others have become christians? Still, CNBC will call these experts for their opinions whereas Kalidas will be left with replying the CMCA queries.
Parag, Surat
4 Nov 09 at 12:16 AM
Sir
Mahatma Gandhi never got Nobel for Peace. Infact he is beyond any recognition. There is no limit for his contribution to the peace. By giving award / prize one is setting the limit. But people like Gandhi are limitless( infinite ) in their contribution. Yours too will be like that in the field of finance/economy.
Shiva
Bangalore
Kalidas Says …. Wednesday, November 04, 2009
I will ask Gandhiji directly when I depart for heavenly abode. He is a truthful man, so he will certainly guide me.
shiva
3 Nov 09 at 10:34 PM
Sir,
Bravo, great job…..I appreciate your wisdom.The only doubt I have is that currently India’s exposure to Gold stands at only 6% of forex reserves as per todays’ article by Economic Times,which according to me is very small. Then how would this have any impact in India’s entire forex holding if Gold price rise?
Hrishikesh
Borivali, Mumbai.
hrishi
3 Nov 09 at 10:16 PM
Sir,
I am feeling very happy and proud that one day in future I will tell my friends or my juniors that I knew this Kalidas from the days when he was not so famous, we interacted through mails and forums…. and those people will then stare at me with disbelief.
I want your name to be written in line with Tagore, Bose, Nehru or Kalam in the history of India.
Sudipta, Kolkata, India.
Kalidas Says …. Wednesday, November 04, 2009
Do not equate those illustrious leaders with a modest person like me. They were simply great and proved themselves beyond doubt. Thanks anyway.
Sudipta
3 Nov 09 at 11:53 AM
Sir,
When I read the referred article in Business Times newspaper (http://economictimes.indiatimes.com/markets/bullion/India-buys-half-of-IMFs-gold-for-sale-whos-next/articleshow/5191921.cms) today morning, I just thought that the Indian Govt must have read your book!
India (buying over China, when the whole world knows that China is currently going all out to buy gold) making such a huge buy certainly means all of your fears are justified.
Also, I think this has just convinced all those on the sidelines that they need to be out buying (I am so happy that all my buying is over …)
I am looking forward to the 2nd lot sale from IMF (and wondering what the price of gold will be when that happens/does not happen).
Personally, I think without your book, India would have sold its inventory in the current high price environment. So, I hope you get your due recognition.
Cheers & Regards,
Ashish Dandekar
Doha, Qatar.
Kalidas Says …. Wednesday, November 04, 2009
They must have. I had sent the pesonal copy to the highest executive almost 2 months ago, and got the personal acknowledgment. (I can not divulge the name, but you can guess without any debate). I had mentioned that India was vulnerable in holding FOREX reserve in Eurodollar which was illegal currency. It must have prompted them into decisive action. India has otherwise never bought gold even when it was at $260, nearly 25% of current price; then how come did they buy such huge quantity at such super price?
Even Economic Times report you quoted shows the surprise under the SURPRISE BUYER.
Writing book and bringing out to the attention of the authorities is a thankless and non rewarding job. I would be saving/making at least Rs 60,000 to 100,000 crores in 2 years – just watch and see. But Kalidas will get neither name nor reward. May be posthumous later. Who knows?
Ashish Dandekar
3 Nov 09 at 10:31 AM
Congrats &
Bravo (if that can be said by younger people .)
sachin ,pune , India .
sachin
3 Nov 09 at 8:19 AM
Sir,
I am delighted to see the impact of your hard work and honest opinions ! I also hope that GOI will immensely benefit out of this transaction and we will one day become a super power ! Thanks to great sons of India like you !
Regards,
Vijay Hegde
Bangalore
Kalidas Says …. Tuesday, November 03, 2009
Thanks. Let us hope for the best.
Vijay Hegde
3 Nov 09 at 6:42 AM
Dear Sir,
Probably this is the first action of RBI which you are appreciating.
. Otherwise you always scold them:-) Looks like new RBI governor is more sensible Man.
Shiva
Banglaore
shiva
3 Nov 09 at 6:33 AM
Dear Sir,
This news was announced one month back by our PM Manmohan Sing that India will be converting some forex reserve into Gold. That was reported by Doordarshan, but none of the news channel/media I reported it. So I was confused, because there was no news about it thereafter.
Rajan
Kannur, India
Kalidas Says …. Tuesday, November 03, 2009
My book was sent much earlier and it was duly acknowledged. No one is going to make serious decision to spend Rs 31,000 crores to buy 200 tons of gold, unless they got very authentic and verifiable information from some source – and my Book was the only source in the world.
Yes, PM must have made up some mind but the decision of such magnitude would be made only after great deliberations between top officials of PM Office, FM Office and RBI. They would have also evaluated the possible inquiry from parliamentarians who would ask why did not GOI buy the gold at $ 330 a couple of years ago, and buying now at almost triple the prices.
Whatever may be, many are asking me whether they should buy the gold now or later. They would be simply dumbfounded by this news. If GOI could buy 20o MT at $ 1,045, why can’t you? will be my answer. I have been recommending gold since it was $ 287 or less.
Rajan
3 Nov 09 at 12:33 AM