IMF Gold Sales: Insignificant

China and IMF Gold Sales; The Real Story
China’s recent veiled threats towards the establishment have been taken to heart. As China announced increased gold reserves from 600 to 1,054 tonnes it was an obvious warning. Initially I thought it was a direct threat against the ocean of treasuries being issued, but I think I have a clearer answer now. China wants the IMF’s gold!

For years the IMF has “threatened” to sell their gold. The final approval had to come from the US since they have veto power. It finally came this past week. For the gold they will receive an insignificant amount of money in today’s terms of $13 billion in paper, sorry I mean bits, or computer digits or whatever you want to call them, which can literally be created in the blink of an eye. The 400 tons of gold being traded for this instant gratification would take a full two months of production from every gold mine in the world to produce. Producing gold is quite a lot more labor intensive and thus gold’s worth is, or should be, much greater.

It became clear to me this morning that the threats by China were threats that they’d better push through the sale of the IMF’s gold or else. Unless you’ve been living on the moon lately, and possibly even then, you’ve noticed the tantamount battle taking place in gold. It coincided with the Chinese announcing gold reserve increases twice and looking back it’s clear to me the threat was either sell me the gold, or I will take gold up and over $1,000 which would have brought in the momentum traders furthering the rally.

The establishment hasn’t wanted and on many days have restrained gold from moving towards it’s fair value. But recently they were losing the battle, and I surmise, succumbed in part by approving the IMF sale. A high gold price is not what they want and they will do everything in their power to slow the inevitable rise. Please see the facts which are all public record that GATA has amassed over the years for much more detailed information.

Other than China “forcing” the IMF to sell them their gold, allowing China to dump some of their US dollars, what is really exciting to me about the sale is that it’s not really hurting gold. Sure, it’s down a bit and just below the 50 day moving average which could certainly knock it down some more, but really it’s holding up well and ultimately, nothing but another of the hundreds of gifts, by way of lower prices, to those who take advantage.
http://news.goldseek.com/GoldSeek/1245776400.php

In one fell swoop, China profoundly alters gold market synergy
When China recently expressed its interest in purchasing $80 billion in gold (about 2600 tonnes), it profoundly altered the gold market's long-standing synergy in three significant ways:

First, it used to be that the threat of central bank gold sales would damage market sentiment. Now the threat of significant sales has been met with the threat of significant purchases.

Second, by becoming gold's most prominent champion, China mounts an aggressive defense of its domestic gold mining industry, and by proxy the rest of the industry as well.

Third, by elevating gold to prominence in its national reserves, China lays the groundwork for the yuan's future use as a prominent reserve currency.

In one fell swoop China has done much to alter the standing gold market synergy. When Congressman Mark Kirk announced China's desire to purchase gold during an interview with Fox News' Greta van Sustern, he noted "across across the board - in private - substantial, continuing and rising concern." Chinese leaders, he added, were sharply critical in private of the US Federal Reserve's policy of "quantitative easing," the modern equivalent of printing money. Kirk went on to say that rising concerns about the dollar and anticipated inflation had prompted China to: "[fund] a second strategic petroleum reserve and they plan to buy $80 billion worth of gold. . . Both of those investments only make sense if you expect significant dollar inflation."

In the years to come, China will continue to steadily build its gold reserves through domestic production. It will also attempt to purchase whatever gold it can on the world market through official sector purchases or whatever additional means it finds at its disposal. In the process it will become the fire-breathing dragon in the gold market's living room - ubiquitous and formidable, a presence that cannot be ignored. At the same time, it will find itself in stiff competition for the available physical gold with an international public which harbors the very same concerns for their own portfolios that Chinese officials expressed to Representative Kirk. Few among gold's growing legions would disagree with China's logic, or its now publicly-voiced desire to hedge a potentially disastrous collapse of the dollar.
http://www.usagold.com/amk/abcs-dragonshoard.html

Guess Who is Pushing Gold Lower?
Trading in the gold and silver markets is frequently opaque, meaning that much of the activity occurs without being public knowledge. As a result, inside knowledge can often be used profitably by short-term traders who detect which way the market is headed before it actually goes there. The most profitable information tends to be the kind that cannot be easily double-checked because, by the time it can be verified, so many other parties are in on the story and have already placed their trades.

In consequence, traders learn which unverifiable sources tend to be accurate over the long haul. Bill Murphy, the chairman of the Gold Anti-Trust Action Committee (GATA) is a veteran commodity trader who receives all kinds of inside tips as to what is really happening. He has enough experience that he can sort out the real from the imaginary stories with a high degree of accuracy. When Bill Murphy has something to say, I pay attention.

In his daily subscription commentary last Wednesday, he revealed, "Early this morning I received a phone call from someone in the gold industry whom I have met previously. He has a friend at the Chicago Mercantile Exchange, which is affiliated with the Comex. This 'friend' has been at the Merc for 35 years and is a pro's pro, having been around the trading block a few times."

"He told my source on Friday [June 12] that the U.S. government told Goldman Sachs on Thursday afternoon to take the price of gold down. Note the Thursday evening MIDAS (Murphy's) comments after gold closed at $960.70 during the Comex trading hours ...

"All of that AND THE GOLD CARTEL HAS THE AUDACITY TO TAKE GOLD DOWN $6 ON NOTHING in the Access Market. If you want to appreciate just how important GOLD is, please take in the above comments. Gold SHOULD HAVE upticked $4 in the Access Market, not downticked ...

"The takedown in the Access Market was a prelude for Friday when Goldman orchestrated a further hit to $939.50, or down $21.40 from the Thursday Comex close, with more selling to come on Monday."

The headlines that were reported referred to the U.S. dollar getting stronger and to oil prices falling, and that was why the prices of gold and silver declined. Well, from the time that gold touched $990 two weeks ago, the value of the U.S. dollar index has increased from 79.5 to 80.5. During the past two weeks, through Monday's Comex close, the price of gold has fallen about 7 percent, entirely out of proportion to being a response to a stronger dollar. At the same time, through Monday's Comex close, silver had fallen more than 15 percent from its peak two weeks earlier.

Actually the current headlines crediting a strong dollar causing the price of gold to decline are contradicted by recent history. When the price of gold topped $1,000 in February, the U.S. dollar index was 87.5. As the dollar index is now lower than 87.5, that theory would indicate that the price of gold should be even higher over $1,000 today.

It has become more obvious that the prices of gold and silver do not trade either in conjunction with or opposite to changes in the stock market indices, U.S. dollar index, the price of oil, long-term U.S. Treasury debt interest rates, or other financial statistics. Rather, for more than the past decade, the most important factor has been whether there was active price suppression activity.
http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=6914

And some still try to deny that Fed helps rig gold market
WASHINGTON -- The Federal Reserve sought to hide its extensive involvement in Bank of America Corp.'s acquisition of Merrill Lynch as Merrill's financial condition worsened, the top Republican on the House Oversight and Government Reform Committee said on Wednesday.

"The committee has already learned that Ben Bernanke and the Federal Reserve made inappropriate threats to fire Bank of America management unless they went ahead with the 'shotgun wedding' that was the Merrill Lynch acquisition.

"The Federal Reserve also engaged in a cover-up and deliberately hid concerns and pertinent details regarding the merger from other federal regulatory agencies," Rep. Darrell Issa said in a statement released to Reuters.

The committee has obtained a number of emails and documents from the Fed about its behind-the-scenes role in the merger, which was quickly brokered late in 2008, according to sources familiar with documents.

The sources said the documents showed the Fed tried to keep secret information about the Bank of America deal from the Office of Comptroller of the Currency, the North Carolina-based bank's direct regulator, and from the Securities and Exchange Commission, according to the sources, who declined to be identified because they were not authorized to speak publicly on the matter.

That behavior "raises important questions" about whether the Fed can work collaboratively with other regulators and should gain additional power, as proposed in the Obama administration's financial regulation plan, the sources said.
http://gata.org/node/7528