Breaking News – 2009.11.18 -IMF in Trouble to Deliver 200 tons of Gold to India?
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IMF in Trouble to Deliver 200 tons of Gold to India?
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| Mining MX of South Africa has reported and indirectly hinted at the possible trouble IMF may have in delivering 200 tons of gold to India. (Link: http://www.miningmx.com/news/gold_and_silver/global-gold-hedge-heads-below-10moz.htm
Following is the report: “The biggest seller is the International Monetary Fund, which is disposing of 403 tonnes of gold. It was reported that India had purchased 200 tonnes of gold but by the start of November this sale had not been settled.” |
IMF is based in Washington D.C. in USA (700 19th Street, N.W., Washington, D.C. 20431). According to IMF factsheet it holds Gold as under:
QUOTE: IMF GOLD The IMF holds 103.4 million ounces (3,217 metric tons) of gold at designated depositories. The IMF’s total gold holdings are valued on its balance sheet at SDR 5.9 billion (about $9.2 billion) on the basis of historical cost. As of August 28, 2009, the IMF’s holdings amounted to $98.8 billion at current market prices. A portion of these holdings was acquired after the Second Amendment of the IMF’s Articles of Agreement in April 1978. This portion, amounting to 12.97 million ounces (403.3 metric tons) with a market value of $12.4 billion as of August 28, 2009, is not subject to restitution to IMF member countries (see below), unlike gold the IMF acquired before 1978. UNQUOTE We do not know who are the designated depositories. One could be “Fort Knox” in USA or some other locations in Switzerland, London and other financial centers. I have already mentioned in my book “Sub Prime Resolved” – Chapter 14 on Gold, the US may have lost almost 90% of its gold by covertly selling or lending to hedge funds which may never come back. These sellers or hedge funds appear to have sold majority of gold below $ 330. If those short sellers were to buyback the shorted gold, there would be huge increase in prices. It is possible, though not conclusive, IMF is not able to deliver the gold physically because the real inventory at Fort Knox may have been reduced. This could be one of the reasons that IMF may not be in position to deliver the gold in time. If the market gets this hint, the gold prices could pierce through the roof. |
| Tiny Mauritius buys 2 tons of gold from IMF
Bloomberg reported… Nov. 17 (Bloomberg) — Mauritius bought 2 metric tons of gold from the International Monetary Fund, underscoring a drive by central banks to boost holdings as the precious metal trades near a record and the dollar slumps. The $71.7 million sale to the Bank of Mauritius was based on market prices on Nov. 11, the IMF said in an e-mailed statement yesterday. The Reserve Bank of India paid $6.7 billion for 200 tons from the IMF, according to a Nov. 2 statement. Mauritius buys 2 MT of Gold from IMF After India, it is Mauritius, not China, to buy gold from IMF |
Mauritius, the pigmy island in the Arabian sea, also surprised the world by buying 2 tons of gold from IMF.
Not very significant quantitatively, but psychologically it will boost the morale of Gold bulls. It shows that Central Banks the world over have turned buyers of gold after a lull of over 3 centuries. Off Market Deals All the transactions between IMF and other countries or central banks, are done “off market” at the current market prices. Thus, unless the IMF announces, the world will never know of any major gold deals. Further, if there is a default in delivery, the world will not know until IMF tells everyone. Had this transaction been done on exchanges, the world would know of non-delivery almost immediately. This will catch the short sellers by their neck. They thought that IMF proposed sale will be a long time hang over on the market. As result, the prices may turn weak. They thought that gold in that case should falter. They never thought that visually poor country like India, which never bought even 1 ton of gold, would buy as much as 200 tons of gold from IMF. They also did not think that tiny Mauritius too will join the rank of India. Who will be the next, is the speculation in the market. It is possible that some middle east countries and oil producers would switch their reserve to gold. No More Gold at Fort Knox? This author, in his book “Sub Prime Resolved” has proved that USA appear to have lost most of its gold though hedging and otherwise. This author has used official figures to prove that “earmark gold” is nothing but the change of ownership of gold from USA to some other countries, possibly IMF and some other countries. According to this author, the USA has lost almost 6000 to 7000 tons of gold until now. While physical gold may be lying at Fort Knox, the real ownership has shifted from USA to some other countries or organizations, one of whom could be IMF. Dear investors, brace up for a giant rally for gold! The gold could jump $ 100 in single day. |
Link to this page
http://economictimes.indiatimes.com/Bullion/India-open-to-buy-more-IMF-gold-Report/articleshow/5267357.cms
Dear Anilji,
Above link is related to India’s intention to buy more gold from IMF. Though there is no official confirmation from RBI.
Parag
Surat
Kalidas Says …. Thursday, November 26, 2009
They already have my book, so they will do that. However, it is their strategic mistake which I will cover this weekend in separate article. I can not cover in few lines.
Parag, Surat
25 Nov 09 at 7:04 AM
http://www.statebankofindia.com/user.htm
Dear Anilji,
Above link is related to Gold Deposit Scheme announce by State Bank of India somewhere in April 2009. (no need to go through link if you are aware about that)
They are offering 1 to 1.5% interest rate on deposited Gold for 3-5 years tenure. According to them they are using this Gold for productive purpose like lending to Jewelers.
Will it be a good idea to deposit gold with SBI & earn some % or I am missing something.
Thanks.
Parag,
Surat, India
Kalidas Says …. Saturday, November 21, 2009
It is a good scheme but usable in slow and bearish market in gold, not during bull run. It has lock in period of 1 year. Supposing you want to sell the gold when it rises 50% in one month, you can not take advantage because of lock in period.
Further, if you are owning gold jewellery, then it is mostly 22K, but in reality it is 18K. You lose in “kasar” and also in labour charges which are quite heavy. I was told that labour charges are in the region of Rs 125 per gram. For 500 grams of jewelery, you lose on the spot about 500 x 125 = Rs 62,500 beside Kasar.
They also need minimum 500 gms of gold – not everyone will have it.
Further, ladies members in the family will never let you melt away their jewellery.
Good on paper but from practicality point of view and current bull market in gold, this is not so useful scheme – in fact it is useless at the moment.
Parag, Surat
21 Nov 09 at 6:16 AM
Dear Sir,
Why the big banks which are heavily short on Gold and Silver (like JP Morgan 40% annual silver production short position etc) are not able to trigger a sell off like last year to cover their short positions. If they allow Gold and Silver reach even your short term targets they would be in big hole. What is the reason they are still not able to trigger a sell off or is a possibility that they may still trigger it in near future.
Regards,
Vivek, Gurgaon, India
Kalidas Says …. Saturday, November 21, 2009
Gold and Silver were the indicator of inflation. If FED wants to keep the interest rates low, it has to control the inflation numbers or the gold/silver prices. This is why it has been using these banks to short the gold and silver to keep the interest rates low.
In 1930 or so, US was having billions of ounces of silver. After depression, it has decided to monetize the silver and started selling this metal. The Agent banks got the wind that US treasury will always be the seller (call Inside info), so they used to take short position. They knew that in case of need they can access the Government owned silver to cover their shorts. It continued for over 70 years.
In 2007, the FED treasury dried up of silver. Warren Buffet also got the wind that Silver will be in short supply, so it took long position. He expected fireworks but did not realize the power of Indians to sell the silver in rally. Most of the shorted silver has found its way in India because poor people use the 1% gold jewellery having silver as base due to frequent street robbery of gold chains.
US has become a Net Buyer of silver for the first time due to heavy demand of minted coins.
Banks like JP Morgan, Citi, Deutsche bank, UBS, HSBC are the big shorter of these metals and currencies of producer countries. These banks have in inventory customer’s gold or silver but they use it for shorting purpose (although they are not allowed to do so officially – but then who would know they tell themselves)
3 out of 5 banks above are bankrupt. If the gold and silver prices gallop, these banks will be in serious troubles.
All South African Zero Coupon bonds are issued by these banks to short the Rand. I therefore bought Rand bonds issued by domestic banks not by these lousy banks. If they fail, they will not have Rand, but the banks in South Africa will have Rand all the time. Further, these Zeros were guaranteed by South Africa governmets.
This was one of the main reason, I was suggesting buying physical silver or gold. If you have ETF or paper gold/silver passbook of these banks, what happens if they close down? These assets do not carry Federal Insurance of USD 250,000 because they are not rated money. officially. Bank deposits do not included paper gold or silver or ETF.
This is why I always say “Physical is physical, paper is paper”
Vivek
21 Nov 09 at 3:49 AM
Dear Sir,
What could be the reasons China did not purchased the IMF gold (till now). One of the reason could be that since they became the largest gold producing country for them it is much cheaper to buy it internally rather than at market prices from outside china.
Also gold is appearing to be gradually rising and not galloping. Is China purchasing behind the scene and don’t want to do it in the open. Since if China comes out in open in purchasing gold the prices could sky rocket and they want to prevent it to maximize their $ holdings.
In your article above on further purchases speculation you did not mentioned China. Any specific reason for omissions?
Regards,
Vivek , Gurgaon, India
Kalidas Says …. Thursday, November 19, 2009
Most of the central banks never wanted to buy gold because non interest bearing asset. There are many Dollar Worshippers even today. In spite of extremely bad news emerging from USA, they still want to remain invested in dollar and not gold.
China is an asset trader. It too does not want to buy gold in place of currencies. It is taking even safer route – buying mineral and metal assets like Iron Ore, Copper, Aluminum, coal etc. which does not attract the attention of USA. If they sell treasury, US might question its motive. If it buys mineral assets as above as necessary for its country’s requirement, and buying those assets from Australia, Africa, Brazil, South Africa, it satisfies USA and at the same time diversifying dollar reserve (paper assets) into real physical assets in valuable countries like Australia (where its assets prices are denominated in AUssie dollar not US dollar. China in that regard is very clever.
India never bought mineral assets. It did not buy or attempted to buy Lukoil or Gazprom oil and gas assets at greatest bargain from Russia when 80% of its bill was for crude and gas. Had it done so, ONGC could have multiplied 5 times and India’s dependence on Muslim countries would have diminished.
China does produce gold upto 12% of world production, but it is all taken up by its local population. And who knows how truthful China is? I never believe their numbers 100% – they will inform the world what World ought to know from them.
Like stocks, the steady rise in gold prices herald a prospect for massive rally one day which will be fastest one day move in Gold in its entire history. That would be a sale day for the time being.
Vivek
19 Nov 09 at 5:55 AM
Dear Sir,
So shall we proceed with buy in gold from now itself, or wait for around Nov 29 to buy more on so called mild correction due to expiry ?
Do you think that this news will have immediate effect on gold price..?
Rajan
Kannur, India
Kalidas Says …. Thursday, November 19, 2009
Gold has corrected today to key level – may be you can buy now. You are getting 2% cheaper. In terms of rupee, you may benefit less, because rupee also went down.
Rajan
19 Nov 09 at 5:44 AM
Dear Kalidas ji,
Each day your observations / analysis is taking shape. Just feel we are heading towards gold valuation era once again. No more would west distance itself from gold.
Regards,
Girish, Pune (INDIA)
Girish
19 Nov 09 at 3:59 AM
Sir,
Is it also possible that some of these short sellers started covering and that resulted into steady rise of gold over past few years ? Would they wait till $1100 to cover the shorts ? I thought even the short sellers would have some stop losses ? I am bit confused.
Thanks,
Vijay Hegde
Bangalore
Vijay Hegde
18 Nov 09 at 10:36 PM